Philip Bunn, May Rostom, Monday, January 12, 2015 - 00:00

Òscar Jordà, Alan Taylor, Moritz Schularick, Sunday, October 12, 2014 - 00:00

Bruno Albuquerque, Ursel Baumann, Georgi Krustev, Friday, April 18, 2014 - 00:00

Household deleveraging in the US has impeded consumption and market activity in recent years, holding back the recovery. Despite substantial progress in balance sheet repair, a key question is whether deleveraging has ended or whether further adjustment is needed. This column presents time-varying equilibrium estimates of the household debt-to-income ratio determined by economic fundamentals. Taking into account the latest available data, the estimates suggest that the household deleveraging process may have ended at the end of 2013.

Scott Ross Baker, Sunday, January 19, 2014 - 00:00

The dramatic fall in consumption during the Great Recession was accompanied by an equally dramatic increase in household debt in the years preceding it. This column examines the relationship between household debt and consumption behaviour, and the channels through which this link operates. The column concludes that the relationship is driven almost entirely by the presence of financial constraints, such as liquidity or borrowing limits.

Lars E.O. Svensson, Wednesday, September 4, 2013 - 00:00

The Riksbank maintains high policy rates since it fears that a lower rate would increase the household-debt ratio. This column argues that a higher rate in fact leads to a higher debt ratio, not a lower one. The higher rate reduces nominal housing prices and new mortgages, but since the new mortgages are such a small share of total mortgages, the total nominal debt falls very slowly. Yet nominal GDP falls much faster, so the debt-to-GDP ratio rises.

CEPR Policy Research