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"Fisher Dynamics" in US Household Debt, 1929-2011

Author

Listed:
  • J. W. Mason
  • Arjun Jayadev

Abstract

The evolution of debt-income ratios over time depends on income growth, inflation, and interest rates, independent of any changes in borrowing. We examine the effect of these "Fisher dynamics" on household debt-income ratios in the United States over the period 1929–2011. Adapting a standard decomposition of public debt to household sector debt, we show that these factors explain, in accounting terms, a large fraction of the changes in household debt-income ratios observed historically. More recently, debt defaults have also been important. Changes in household debt-income ratios over time cannot be straightforwardly interpreted as reflecting shifts in the supply and demand of household credit.

Suggested Citation

  • J. W. Mason & Arjun Jayadev, 2014. ""Fisher Dynamics" in US Household Debt, 1929-2011," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(3), pages 214-234, July.
    • Handle: RePEc:aea:aejmac:v:6:y:2014:i:3:p:214-34
    Note: DOI: 10.1257/mac.6.3.214
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    Citations

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    Cited by:

    1. Michalis Nikiforos, 2015. "A Nonbehavioral Theory of Saving," Economics Working Paper Archive wp_844, Levy Economics Institute.
    2. Nina Boyarchenko & Giovanni Favara & Moritz Schularick, 2022. "Financial Stability Considerations for Monetary Policy: Empirical Evidence and Challenges," Staff Reports 1003, Federal Reserve Bank of New York.
    3. Barry Z. Cynamon & Steven M. Fazzari, 2017. "Household Income, Demand, and Saving: Deriving Macro Data With Micro Data Concepts," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(1), pages 53-69, March.
    4. Bhutta, Neil, 2015. "The ins and outs of mortgage debt during the housing boom and bust," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 284-298.
    5. Berisha, Edmond & Meszaros, John, 2020. "Macroeconomic determinants of wealth inequality dynamics," Economic Modelling, Elsevier, vol. 89(C), pages 153-165.
    6. Enno Schröder, 2015. "Eurozone Imbalances: Measuring the Contribution of Expenditure Switching and Expenditure Volumes 1990-2013," Working Papers 1508, New School for Social Research, Department of Economics, revised Sep 2015.
    7. Pan, Wei-Fong, 2023. "Household debt in the times of populism," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 202-215.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-

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    1. “Fisher Dynamics” in US Household Debt, 1929-2011 (AEJ:MA 2014) in ReplicationWiki

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