Debt overhang and deleveraging in the US household sector: Gauging the impact on consumption

Arbeitspapier

Using a novel dataset for the US states, this paper examines whether household debt and the protracted debt deleveraging help explain the dismal performance of US consumption since 2007, in the aftermath of the housing bubble. By separating the concepts of deleveraging and debt overhang - a flow and stock effect - we find that excessive indebtedness exerted a meaningful drag on consumption over and beyond income and wealth effects. The overall impact, however, is modest, around one-sixth of the slowdown in consumption between 2000-06 and between 2007-12 - and mostly driven by states with particularly large imbalances in the household sector. This might be indicative of non-linearities, whereby indebtedness begins to bite only when misalignments from sustainable debt dynamics become more excessive.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Bank of Canada Staff Working Paper ; No. 2015-47

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Estimation: General ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Model Evaluation, Validation, and Selection ; Consumer Economics: Empirical Analysis ; Fiscal Policies and Behavior of Economic Agents: Household
• Thema: Credit and credit aggregates ; Econometric and statistical methods ; International topics

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Albuquerque, Bruno ; Krustev, Georgi
• Ereignis: Veröffentlichung
• (wer): Bank of Canada
• (wo): Ottawa
• (wann): 2015

Weitere Informationen

• DOI: doi:10.34989/swp-2015-47
• Handle: http://hdl.handle.net/10419/141990
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ