| Many economic measures indicate that the volatility of U.S. economy fell principally since the mid-1980s than it has been in the preceding couple of decades. Various writers argue that the U.S. economy more stable because of improved inventory management, better monetary policy. Financial innovation also plays an important role in the fall of the economic volatility. While the volatility of economy fell, household assets have some new features.From the analysis above, we could understand the principal changes of household assets:1 the volatility of household income increase,2 the volatility of the house price impact household assets greatly,3 household debts increase markedly.The role that house play in the households is more important, the volatility of house prices could impact the volatility of household wealth, as well as consumption and consumer welfare. The third part of the paper analyzes the factors that influent the volatility of the house price and the impact of the volatility.Because of the changes of the economic environment, specially the expansion of the financial opportunities, household debt increase greatly. Households could take advantage of the debt to smooth their lifetime consumption. However, the financial crisis that began in 2007 has powerfully illustrated that expanded financial opportunities can also pose dangers for households. Households may borrow too much and then face obligations that are unsustainable given their resources. The forth part of the paper analyzes the factors the cause the increasing of the household debts.There are three factors that cause the increasing of the household debt:l deregulation and financial innovation,2 the changes of the economic circumstances such as the reduction in interest rate and the expansion of the house price,3 the shortage of the knowledge about debt. The raise of the household could influent consumption and cause the raise of the default rate. |
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