Hedging Against Uncertainty: Economic Policy Uncertainty and Household Asset Financing

Hedging Against Uncertainty: Economic Policy Uncertainty and Household Asset Financing

• Autor
• Flavio Moraes
• Co-autores
• Rodrigo Leite , Matheus Moura
• Resumo

• We examine how economic policy uncertainty (EPU) affects household demand for alternative credit, focusing on credit lotteries, a popular tool among low- and middle-income households in Brazil. Using administrative data and an instrumental-variables design exploiting an exogenous EPU event, we find that a one standard-deviation increase in EPU raises credit lottery participation by 4%, mainly in vehicle financing. Traditional asset financing declines while savings rise, consistent with precautionary behavior and the well-documented tightening of conventional credit during uncertainty. Credit lotteries thus act as a hybrid “saving-and-credit” device, supporting household resilience by enabling vehicle financing as a hedge against economic uncertainty.

   

• Palavras-chave
• credit lotteries, asset financing, household finance
• Modalidade
• Comunicação oral
• Área Temática
• Apreçamento de Ativos

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