Workers’ debt, default and the diversity of financial fragilities.

Highlights: [•] This paper presents a model of financial instability with household debt. [•] Household debt interacts with functional income distribution and credit supply. [•] Financial fragility arises through a Fisher effect in the first case. [•] Instability arises through a debt financed consumption boom in the second case. [•] The model also looks at debt default and capital adequacy ratio. [ABSTRACT FROM AUTHOR]