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Household Debt and Recession in Brazil

Author

Listed:
  • Gabriel Garber
  • Atif Mian
  • Jacopo Ponticelli
  • Amir Sufi

Abstract

Brazil experienced one of the most severe recessions in its history from 2014 to 2016. Following a pattern shown for previous economic downturns in other countries, the Brazilian recession was preceded by a substantial increase in household debt from 2003 to 2014. This study utilizes a novel individual level data set on household borrowing in order to provide details of the household debt boom. The data set allows for a decomposition of the rise in household debt by the type of debt and by the source of debt, and it allows for an analysis of the income of individuals taking on more debt during the boom. We conclude with an exploration of potential causes of the rise in household debt.

Suggested Citation

  • Gabriel Garber & Atif Mian & Jacopo Ponticelli & Amir Sufi, 2018. "Household Debt and Recession in Brazil," NBER Working Papers 25170, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25170
    Note: CF EFG IFM ME
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    References listed on IDEAS

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    1. Barroso, João Barata R.B. & da Silva, Luiz A. Pereira & Sales, Adriana Soares, 2016. "Quantitative easing and related capital flows into Brazil: Measuring its effects and transmission channels through a rigorous counterfactual evaluation," Journal of International Money and Finance, Elsevier, vol. 67(C), pages 102-122.
    2. Bruno Martins & Eduardo Lundberg & Tony Takeda, 2011. "Housing Finance in Brazil: Institutional Improvements and Recent Developments," Research Department Publications 4730, Inter-American Development Bank, Research Department.
    3. Mathias Drehmann & Mikael Juselius & Anton Korinek, 2018. "Going With the Flows: New Borrowing, Debt Service and the Transmission of Credit Booms," NBER Working Papers 24549, National Bureau of Economic Research, Inc.
    4. Eduardo Luis Lundberg, 2011. "Bancos Oficiais e Crédito Direcionado – o que diferencia o mercado de crédito brasileiro?," Working Papers Series 258, Central Bank of Brazil, Research Department.
    5. Bruno Martins & Eduardo Lundberg & Tony Takeda, 2011. "Housing Finance in Brazil: Institutional Improvements and Recent Developments," Research Department Publications 4730, Inter-American Development Bank, Research Department.
    6. Martins, Bruno & Lundberg, Eduardo & Takeda, Tony, 2011. "Housing Finance in Brazil: Institutional Improvements and Recent Developments," IDB Publications (Working Papers) 3742, Inter-American Development Bank.
    7. Ilan Goldfajn & Katherine Hennings & Hélio Mori, 2003. "Brazil’s Financial System: Resilience to Shocks, no Currency Substitution, but Struggling to Promote Growth," Working Papers Series 75, Central Bank of Brazil, Research Department.
    8. Christiano A. Coelho & João M.P. De Mello & Bruno Funchal, 2012. "The Brazilian Payroll Lending Experiment," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 925-934, November.
    9. Forbes, Kristin J. & Warnock, Francis E., 2012. "Capital flow waves: Surges, stops, flight, and retrenchment," Journal of International Economics, Elsevier, vol. 88(2), pages 235-251.
    10. Byrne, Joseph P. & Fiess, Norbert, 2011. "International Capital Flows to Emerging and Developing Countries: National and Global Determinants," SIRE Discussion Papers 2011-03, Scottish Institute for Research in Economics (SIRE).
    11. Jacopo Ponticelli & Leonardo S. Alencar, 2016. "Court Enforcement, Bank Loans, and Firm Investment: Evidence from a Bankruptcy Reform in Brazil," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(3), pages 1365-1413.
    12. Ahmed, Shaghil & Zlate, Andrei, 2014. "Capital flows to emerging market economies: A brave new world?," Journal of International Money and Finance, Elsevier, vol. 48(PB), pages 221-248.
    13. repec:zbw:bofrdp:2018_010 is not listed on IDEAS
    14. Tony Takeda & Paulo Evandro Dawid, 2013. "Um Estudo sobre Comportamento de Tomadores e Ofertantes no Mercado de Crédito," Working Papers Series 338, Central Bank of Brazil, Research Department.
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    Cited by:

    1. Gabriel Garber & Atif Mian & Jacopo Ponticelli & Amir Sufi, 2020. "Government Banks, Household Debt, and Economic Downturns: the case of Brazil," Working Papers Series 538, Central Bank of Brazil, Research Department.
    2. Bertran, Maria Paula & Echeverry, David, 2021. "What is the size of credit card debt in Brazil? Reporting Thresholds, Interest Rates and Income Distribution," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    3. Filipe Correia & Gustavo S. Cortes & Thiago C. Silva, 2021. "Is Corporate Credit Risk Propagated to Employees?," Working Papers Series 551, Central Bank of Brazil, Research Department.
    4. Rossi, Jose Luiz & Delmondes de Carvalho Rossi, Marina & Carvalho Cunha, Daniel, 2019. "Transmission of monetary policy through the wealth channel in Brazil: Does the type of asset matter?," Research in International Business and Finance, Elsevier, vol. 50(C), pages 279-293.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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