Julian Reif @julianreif.bsky.social · 23/04/2026Why? Loans spread shocks over time. Longer repayment or lower rates make borrowing a closer substitute, further lowering insurance value. Effects are largest for lower-income households, who benefit most from added smoothing options. 100
Julian Reif @julianreif.bsky.social · 23/04/2026Our work complements work by @profericson.bsky.social and @justinsydnor.bsky.social, who show liquidity constraints raise insurance value. We show the flip side: expanding credit relaxes constraints and reduces insurance value. Together: insurance matters most when other smoothing tools are limited. 210
Julian Reif @julianreif.bsky.social · 23/04/2026Link to Ericson and Sydnor (2026): www.aeaweb.org/articles?id=...aeaweb.orgLiquidity Constraints and the Value of Insurance(Forthcoming Article) - Insurance moves resources across both time and states. We study the consumptionsmoothing benefits of insurance under liquidity constraints in a model where contracts span multi... 010
Justin Sydnor @justinsydnor.bsky.social · 23/04/2026Thanks, Julian for the shout out here. Very much agree that these two streams are complementing each other and part of a bigger discussion around how much credit and liquidity matter for risk management and the functioning of insurance. 010
