Debt Overhang and Deleveraging in the US Household Sector: Gauging the Impact on Consumption

Bruno Albuquerque & Georgi Krustev
Using a novel dataset for the US states, this paper examines whether household debt and the protracted debt deleveraging help explain the dismal performance of US consumption since 2007, in the aftermath of the housing bubble. By separating the concepts of deleveraging and debt overhang—a flow and stock effect—we find that excessive indebtedness exerted a meaningful drag on consumption over and beyond income and wealth effects. The overall impact, however, is modest, around one-sixth of...
This data repository is not currently reporting usage information. For information on how your repository can submit usage information, please see our documentation.