How Did Household Balance Sheets Affect Consumption During the Great Recession?

Research output: Working paper

Abstract

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.
Original languageEnglish (US)
PublisherVoxEU
StatePublished - Jan 19 2014

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