Abstract: This paper examines the impact of partisan bias on household consumption. Leveraging detailed household purchase data, I find that households politically aligned with the current U.S. president exhibit higher spending levels and purchase higher-quality goods compared to their misaligned counterparts. This consumption gap cannot be explained by changes in household economic situations or supply-side factors but instead reflects differences in optimism. The partisan consumption effect is more pronounced among politically extreme households and during periods of heightened polarization. Using the staggered entry of right-wing media as a shock to household political attitudes, I show that this shock increases optimism and consumption under Republican presidencies while decreasing both under Democratic ones. Political alignment also correlates with lower savings, suggesting that aligned households, driven by optimism, reduce precautionary savings to support higher spending. Overall, these findings highlight how partisan beliefs can shape household consumption and savings behavior.

Abstract: Do political shifts shape household leverage cycles? Comparing otherwise similar mortgage borrowers in consistently Democratic- and Republican-leaning areas, we find that those politically aligned with the U.S. president request larger loans and use higher leverage. Lender screening only partially offsets this surge in demand, yielding a 10% relative increase in originations in aligned regions. The effects intensify in politically homogeneous areas, during periods of heightened partisan conflict, and among financially unconstrained borrowers. Survey evidence shows that aligned individuals hold more optimistic housing market expectations. Yet these beliefs do not materialize in stronger fundamentals, leading to higher delinquency in aligned regions.

Abstract: When is learning about borrowers valuable? We develop a model in which a financier chooses an information technology before origination, receives its signal before refinancing, and cannot commit ex ante to a refinancing rule. Richer information improves continuation decisions but weakens commitment to liquidation, encouraging speculative entry and worsening borrower selection. We characterize the optimal information policy and show that lower information costs increase learning only when the resulting selection problem is limited, while information is most valuable for intermediate-quality projects. Thus, even inexpensive, predictive information technologies may optimally remain unused when they undermine commitment and distort initial credit demand.