... debt b y plotting the increase in consum ption that would be possible b ymargin ally increasing short-term debt, relativ e to the in crease in consum ption that i s possibleb y issuin g more long-term ... both in the mode l and in the data. Mo reove r, price ratios are disproportionately lo werfor short-term debt when short spreads are high both in the model and in the data.17 The distinct dynam ... save p art of the period 1 income t o r epa y the loan in period 2. Since the borrower cannot commit to this policy in period 0 , however, t he20occ urs in equ ilibrium in low-income, high-debt...