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The growth of consumer credit and the household debt service burden

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  • Dean M. Maki

Abstract

Household debt is at a record high relative to disposable income. Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households and ultimately lead them to curtail their spending. In this paper, I summarize some of the relevant facts concerning the growth of consumer credit and the household debt service burden, outline the results of the research that has been conducted in this area, and look at the questions that might be answered with additional research.

Suggested Citation

  • Dean M. Maki, 2000. "The growth of consumer credit and the household debt service burden," Finance and Economics Discussion Series 2000-12, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgfe:2000-12
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    References listed on IDEAS

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    1. Antzoulatos, Angelos A., 1996. "Consumer credit and consumption forecasts," International Journal of Forecasting, Elsevier, vol. 12(4), pages 439-453, December.
    2. Bernanke, Ben & Gertler, Mark & Gilchrist, Simon, 1996. "The Financial Accelerator and the Flight to Quality," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 1-15, February.
    3. John V. Duca, 1995. "Credit availability, bank consumer lending, and consumer durables," Working Papers 9514, Federal Reserve Bank of Dallas.
    4. Jappelli, Tullio & Pagano, Marco, 1989. "Consumption and Capital Market Imperfections: An International Comparison," American Economic Review, American Economic Association, vol. 79(5), pages 1088-1105, December.
    5. Chris Carroll & Wendy Dunn, 1997. "Unemployment Expectations, Jumping (S,s) Triggers, and Household Balance Sheets," NBER Chapters,in: NBER Macroeconomics Annual 1997, Volume 12, pages 165-230 National Bureau of Economic Research, Inc.
    6. Mishkin, Frederic S, 1976. "Illiquidity, Consumer Durable Expenditure, and Monetary Policy," American Economic Review, American Economic Association, vol. 66(4), pages 642-654, September.
    7. Lynn Paquette, 1986. "Estimating household debt service payments," Quarterly Review, Federal Reserve Bank of New York, issue Sum, pages 12-23.
    8. King, Mervyn, 1994. "Debt deflation: Theory and evidence," European Economic Review, Elsevier, vol. 38(3-4), pages 419-445, April.
    9. repec:fth:jonhop:386 is not listed on IDEAS
    10. Sydney Ludvigson, 1999. "Consumption And Credit: A Model Of Time-Varying Liquidity Constraints," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 434-447, August.
    11. Jonathan McCarthy, 1997. "Debt, delinquencies, and consumer spending," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 3(Feb).
    12. Bacchetta, Philippe & Gerlach, Stefan, 1997. "Consumption and credit constraints: International evidence," Journal of Monetary Economics, Elsevier, vol. 40(2), pages 207-238, October.
    13. C. Alan Garner, 1996. "Can measures of the consumer debt burden reliably predict an economic slowdown?," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 63-76.
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    Citations

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    Cited by:

    1. Kösters, Wim & Paul, Stephan & Stein, Stefan, 2004. "An economic analysis of the EU commission's proposal for a new Consumer Credit Directive: Offering consumers more protection or restricting their options?," RWI Materialien 9, RWI - Leibniz-Institut für Wirtschaftsforschung.
    2. A Lusardi & J Skinner & S Venti, 2001. "Saving puzzles and saving policies in the United States," Oxford Review of Economic Policy, Oxford University Press, vol. 17(1), pages 95-115, Spring.
    3. Meral Karasulu, 2008. "Stress Testing Household Debt in Korea," IMF Working Papers 08/255, International Monetary Fund.
    4. Wim Kösters & Stephan Paul & Stefan Stein, 2004. "An economic analysis of the EU Commission's proposal for a new Consumer Credit Directive – Offering consumers more protection or restricting their options?," RWI Materialien, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 33, 02.
    5. Markus Christen & Ruskin Morgan, 2005. "Keeping Up With the Joneses: Analyzing the Effect of Income Inequality on Consumer Borrowing," Quantitative Marketing and Economics (QME), Springer, vol. 3(2), pages 145-173, June.
    6. repec:zbw:rwimat:009 is not listed on IDEAS
    7. Andrew Kish, 2006. "Perspectives on recent trends in consumer debt," Payment Cards Center Discussion Paper 06-05, Federal Reserve Bank of Philadelphia.
    8. Andrew C. Worthington, 2003. "Debt as a source of financial stress in Australian households," School of Economics and Finance Discussion Papers and Working Papers Series 164, School of Economics and Finance, Queensland University of Technology.
    9. Arthur Kennickell & Annamaria Lusardi, 2004. "Disentangling the Importance of the Precautionary Saving Mode," NBER Working Papers 10888, National Bureau of Economic Research, Inc.
    10. Rinaldi, Laura & Sanchis-Arellano, Alicia, 2006. "Household debt sustainability: what explains household non-performing loans? An empirical analysis," Working Paper Series 570, European Central Bank.
    11. Lucia Dunn & Tufan Ekici & Paul J. Lavrakas & Jeffery A. Stec, 2004. "An Index to Track Credit Card Debt and Predict Consumption," Working Papers 04-04, Ohio State University, Department of Economics.
    12. Tufan Ekici & Lucia Dunn, 2010. "Credit card debt and consumption: evidence from household-level data," Applied Economics, Taylor & Francis Journals, vol. 42(4), pages 455-462.
    13. Emilio Fernandez-Corugedo & John Muellbauer, 2006. "Consumer credit conditions in the United Kingdom," Bank of England working papers 314, Bank of England.
    14. Marcel Fafchamps & Flore Gubert, 2007. "Contingent Loan Repayment in the Philippines," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 633-667.
    15. Sebastian Barnes & Garry Young, 2003. "The rise in US household debt: assessing its causes and sustainability," Bank of England working papers 206, Bank of England.
    16. Andrew C. Worthington, 2003. "Emergency finance in Australian households An empirical analysis of capacity and sources," School of Economics and Finance Discussion Papers and Working Papers Series 163, School of Economics and Finance, Queensland University of Technology.
    17. Webley, Paul & Nyhus, Ellen K., 2006. "Parents' influence on children's future orientation and saving," Journal of Economic Psychology, Elsevier, vol. 27(1), pages 140-164, February.

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    Keywords

    Consumer credit ; Consumption (Economics) ; Debt;

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