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Exploring Differences in Household Debt Across the United States and Euro Area Countries

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  • Ehrmann, Michael
  • Christelis, Dimitris
  • Georgarakos, Dimitris

Abstract

Household debt in the United States has played a central role in the up-run and the aftermath of the global financial crisis. Despite this, our understanding of household debt and potential debt overhang is still limited. To shed light on this issue, we put U.S. household leverage in an international perspective, using household-level data for the United States and ten euro area economies. U.S. households have the highest prevalence of collateralized and non-collateralized debt, hold comparatively large amounts of loans, and face a higher debt-service burden, even though they have higher income and financial wealth. These differences are mainly related to the U.S. economic environment, which appears to be more conducive to both types of debt, primarily because a given level of collateral is associated with higher prevalence of collateralized debt, and larger amounts of it, in the United States.

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  • Ehrmann, Michael & Christelis, Dimitris & Georgarakos, Dimitris, 2020. "Exploring Differences in Household Debt Across the United States and Euro Area Countries," CEPR Discussion Papers 15368, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15368
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    7. Fleck, Johannes & Monninger, Adrian, 2020. "Culture and portfolios: trust, precautionary savings and home ownership," Working Paper Series 2457, European Central Bank.
    8. Georgarakos, Dimitris & Popov, Alexander, 2024. "I (don’t) owe you: sovereign default and borrowing behavior," Working Paper Series 2893, European Central Bank.

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    More about this item

    Keywords

    Household debt; Debt burden; Household finance; Counterfactual decompositions;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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