Changes in U.S. household balance sheet behavior after the housing bust and Great Recession: evidence from panel data
This paper uses panel data through 2011 to examine evidence of shifts in household balance sheet behavior following the financial crisis and Great Recession. The paper considers evidence of balance sheet repair through debt repayment as well as changes in the composition of households’ balance sheets and/or saving decisions to determine whether households’ desire for holding or investing in riskier versus safer assets has changed. The data show relatively small and limited balance sheet adjustment—especially for those households considered the most likely to have been impacted by the economic collapse. The adjustment that did occur typically raised households’ liquid asset holdings and/or saving and reduced their risky asset positions (stocks). There is also some evidence of increased nonhousing debt repayment and slower takeup of new nonhousing debt. Overall, the findings are inconsistent with major adjustments occurring in households’ balance sheet behavior—especially to the extent where these shifts would have contributed substantially to the sluggish economic recovery
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- F. Thomas Juster & Joseph P. Lupton & James P. Smith & Frank Stafford, 2004.
"The decline in household saving and the wealth effect,"
Finance and Economics Discussion Series
2004-32, Board of Governors of the Federal Reserve System (U.S.).
- F. Thomas Juster & Joseph P. Lupton & James P. Smith & Frank Stafford, 2006. "The Decline in Household Saving and the Wealth Effect," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 20-27, February.
- Atif Mian & Kamalesh Rao & Amir Sufi, 2013. "Household Balance Sheets, Consumption, and the Economic Slump," The Quarterly Journal of Economics, Oxford University Press, vol. 128(4), pages 1687-1726.
- Daniel Cooper, 2013. "House Price Fluctuations: The Role of Housing Wealth as Borrowing Collateral," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1183-1197, October.
- Meta Brown & Andrew F. Haughwout & Donghoon Lee & Wilbert Van der Klaauw, 2013.
"The financial crisis at the kitchen table: trends in household debt and credit,"
Current Issues in Economics and Finance,
Federal Reserve Bank of New York, vol. 19(April).
- Meta Brown & Andrew F. Haughwout & Donghoon Lee & Wilbert Van der Klaauw, 2010. "The financial crisis at the kitchen table: trends in household debt and credit," Staff Reports 480, Federal Reserve Bank of New York.
- Edward S. Knotek & John Carter Braxton, 2012. "What drives consumer debt dynamics?," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV.
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