Household financial vulnerability
Household indebtedness in Chile has received considerable attention in recent years because of the financial deepening process underway in the economy. Although various macroeconomic indicators show significant increases in the last decade, there are few tools for evaluating the real vulnerability of this sector from a financial stability perspective. One of these tools is stress testing using microeconomic information. Although households may face a variety of financial risks from a range of sources, the household sector is most sensitive to changes in household income, such as those caused by unemployment (Debelle, 2004a, 2004b). Moreover, household vulnerability to aggregate shocks that raise the unemployment rate will depend on both debt distribution and household characteristics. The heterogeneity of indebtedness levels and income uncertainty calls for microeconomic analysis.