Michael Irwin

Published Papers:

The Impact of Unemployment Insurance and Unsecured Credit on Business Cycles

Journal of Political Economy: Macroeconomics, 2025, 3:2, 199-240

[Published Version] [Online Appendix]

How does unsecured consumer credit impact the effectiveness of unemployment insurance (UI) in insuring households against idiosyncratic and aggregate risk over the business cycle?  The answer depends on whether credit and UI act as complementary or substitutable form of consumption insurance for households.  Using a real business cycle model with frictional labor markets and defaultable debt, I find that unsecured credit amplifies the welfare gains of a policy that extends the duration of UI during recessions.  UI extensions mitigate the rise in the default-risk premium of unsecured credit during recessions, which allows households to better smooth consumption over the business cycle.

Working Papers:

"Mortgage Interest Rate Risk and the Propagation of Shocks," with Matias Vieyra 

"Stimulus Effects of the Student Debt Relief Program," with Heejeong Kim 

"The Impact of Bankruptcy Reform on Education and Student Loans," with Heejeong Kim 

"A Method of Overlapping Endogenous Grids to Solve Problems with Non-Concavities"

Note: Any views on this website are my own and do not reflect the views of the Bank of Canada.