The economics of household leveraging and deleveraging
AbstractSince the start of the financial crisis of 2007-09, a historically large number of household loans have become delinquent and residential houses have been foreclosed. This situation, coupled with households actively paying down their debt or cutting down on new borrowing, marked the beginning of household deleveraging. In this article, Wenli Li and Susheela Patwari discuss recent theoretical and empirical work by economists that sheds light on the process of leveraging and deleveraging and that helps to provide answers to a number of questions, such as: What determines when and how much a household borrows? What helps account for the widely noted increase in consumer debt levels in the run-up to the financial crisis? Finally, how has deleveraging progressed, and what are the implications for consumption and the broader economy?
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Federal Reserve Bank of Philadelphia in its journal Business Review.
Volume (Year): (2012)
Issue (Month): Q3 ()
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Atif Mian & Amir Sufi, 2009. "The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis," The Quarterly Journal of Economics, MIT Press, vol. 124(4), pages 1449-1496, November.
- Benjamin J. Keys & Tanmoy Mukherjee & Amit Seru & Vikrant Vig, 2010. "Did Securitization Lead to Lax Screening? Evidence from Subprime Loans," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 307-362, February.
- Wenli Li & Fang Yang, 2010. "American dream or American obsession? The economic benefits and costs of homeownership," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 20-30.
- Michael Dotsey & Wenli Li & Fang Yang, 2010. "Consumption and time use over the life cycle," Working Papers 10-37, Federal Reserve Bank of Philadelphia.
- Dirk Krueger & Fabrizio Perri, 2006. "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory -super-1," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 163-193.
- Karen E. Dynan & Douglas W. Elmendorf & Daniel E. Sichel, 2005.
"Can financial innovation help to explain the reduced volatility of economic activity?,"
Finance and Economics Discussion Series
2005-54, Board of Governors of the Federal Reserve System (U.S.).
- Dynan, Karen E. & Elmendorf, Douglas W. & Sichel, Daniel E., 2006. "Can financial innovation help to explain the reduced volatility of economic activity?," Journal of Monetary Economics, Elsevier, vol. 53(1), pages 123-150, January.
- Patrick Bajari & Chenghuan Sean Chu & Minjung Park, 2008. "An Empirical Model of Subprime Mortgage Default From 2000 to 2007," NBER Working Papers 14625, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Beth Paul).
If references are entirely missing, you can add them using this form.