IDEAS home Printed from https://ideas.repec.org/a/fip/fedker/y2012iqivnv.97no.4x1.html

What drives consumer debt dynamics?

Author

Listed:
  • John Carter Braxton
  • Edward S. Knotek

Abstract

Consumers generally have been reducing their debt levels in the wake of the housing bust, and many policymakers and economists have pointed to this deleveraging as an important drag on the recovery from the recession. ; A key driving factor has been the sharp decline in the number of consumers taking on additional debt. With fewer borrowers taking advantage of low interest rates to take on debt and expand spending, accommodative monetary policy is less effective than in normal times. ; But Knotek and Braxton find that a modest rebound is now under way in the number of consumers increasing their debt. The trend is evident across geographic regions, including areas that experienced strong debt growth during the housing bubble, suggesting that debt overhang may be playing only a limited role in the consumer debt dynamics of the recovery.

Suggested Citation

  • John Carter Braxton & Edward S. Knotek, 2012. "What drives consumer debt dynamics?," Economic Review, Federal Reserve Bank of Kansas City, vol. 97(Q IV).
    • Handle: RePEc:fip:fedker:y:2012:i:qiv:n:v.97no.4:x:1
    as

    Download full text from publisher

    File URL: https://www.kansascityfed.org/documents/934/2012-What%20Drives%20Consumer%20Debt%20Dynamics%3F.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert E. Hall, 2011. "The Long Slump," American Economic Review, American Economic Association, vol. 101(2), pages 431-469, April.
    2. Gauti B. Eggertsson & Paul Krugman, 2012. "Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(3), pages 1469-1513.
    3. Donghoon Lee & Wilbert Van der Klaauw, 2010. "An introduction to the FRBNY Consumer Credit Panel," Staff Reports 479, Federal Reserve Bank of New York.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daniel H. Cooper, 2013. "Changes in U.S. household balance sheet behavior after the housing bust and Great Recession: evidence from panel data," Public Policy Discussion Paper 13-6, Federal Reserve Bank of Boston.
    2. Troy Davig & William Xu, 2016. "Tracking Consumer Credit Trends," Macro Bulletin, Federal Reserve Bank of Kansas City, pages 1-4, August.
    3. John Carter Braxton & Edward S. Knotek, 2014. "Consumer debt dynamics:follow the increasers," Research Working Paper RWP 14-2, Federal Reserve Bank of Kansas City.
    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Yahong, 2019. "Household debt, financial intermediation, and monetary policy," Journal of Macroeconomics, Elsevier, vol. 59(C), pages 230-257.
    2. George-Marios Angeletos, 2018. "Frictional Coordination," Journal of the European Economic Association, European Economic Association, vol. 16(3), pages 563-603.
    3. Viral V. Acharya & Katharina Bergant & Matteo Crosignani & Tim Eisert & Fergal Mccann, 2022. "The Anatomy of the Transmission of Macroprudential Policies," Journal of Finance, American Finance Association, vol. 77(5), pages 2533-2575, October.
    4. Òscar Jordá & Moritz Schularick & Alan M. Taylor, 2016. "Sovereigns Versus Banks: Credit, Crises, and Consequences," Journal of the European Economic Association, European Economic Association, vol. 14(1), pages 45-79.
    5. André Teixeira & Zoë Venter, 2021. "Macroprudential Policy and Aggregate Demand," Working Papers REM 2021/0181, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    6. Guerrieri, V. & Uhlig, H., 2016. "Housing and Credit Markets," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1427-1496, Elsevier.
    7. Liang Wu & Lei Zhang & Zhiming Fu, 2015. "Deleveraging, short sale constraints and market crash," Papers 1511.03777, arXiv.org.
    8. Bruno Albuquerque & Georgi Krustev, 2018. "Debt Overhang and Deleveraging in the US Household Sector: Gauging the Impact on Consumption," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(2), pages 459-481, June.
    9. André K. Anundsen & Ragnar Nymoen, 2015. "Did US consumers ‘save for a rainy day’ before the Great Recession?," Working Paper 2015/08, Norges Bank.
    10. Yoshiyasu Ono, 2017. "Country Size, Specialization Patterns and Secular Demand Stagnation," CESifo Working Paper Series 6752, CESifo.
    11. Homburg, Stefan, 2017. "A Study in Monetary Macroeconomics," OUP Catalogue, Oxford University Press, number 9780198807537.
    12. Tiago Berriel & Rodrigo Abreu, 2015. "Long Term Debt and Credit Crisis in a Liquidity Constrained Economy," Textos para discussão 644, Department of Economics PUC-Rio (Brazil).
    13. Guo, Minjie & McDermott, John, 2020. "Sovereign debt and the length of economic depressions," Economic Modelling, Elsevier, vol. 90(C), pages 79-91.
    14. Deniz Aydin, 2015. "The marginal propensity to consume out of liquidity: Evidence from a randomized controlled trial," 2015 Meeting Papers 270, Society for Economic Dynamics.
    15. Pierpaolo Benigno & Gauti B. Eggertsson & Federica Romei, 2020. "Dynamic Debt Deleveraging and Optimal Monetary Policy," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(2), pages 310-350, April.
    16. Harashima, Taiji, 2019. "A Pareto Inefficient Path to Steady State in Recession," MPRA Paper 93216, University Library of Munich, Germany.
    17. João Braz Pinto & João Sousa Andrade, 2015. "A Monetary Analysis of the Liquidity Trap," GEMF Working Papers 2015-06, GEMF, Faculty of Economics, University of Coimbra.
    18. Ngo, Phuong V., 2014. "Optimal discretionary monetary policy in a micro-founded model with a zero lower bound on nominal interest rate," Journal of Economic Dynamics and Control, Elsevier, vol. 45(C), pages 44-65.
    19. Alejandro Justiniano & Giorgio E. Primiceri & Andrea Tambalotti, 2019. "Credit Supply and the Housing Boom," Journal of Political Economy, University of Chicago Press, vol. 127(3), pages 1317-1350.
    20. Jonathan Zinman, 2014. "Consumer Credit: Too Much or Too Little (or Just Right)?," The Journal of Legal Studies, University of Chicago Press, vol. 43(S2), pages 209-237.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedker:y:2012:i:qiv:n:v.97no.4:x:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kira Lillard (email available below). General contact details of provider: https://edirc.repec.org/data/frbkcus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.