Household Leveraging and Deleveraging

Andrea Tambalotti, Giorgio Primiceri and Alejandro Justiniano

No 9671, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Abstract. U.S. households' debt skyrocketed between 2000 and 2007, and has been falling since. This leveraging (and deleveraging) cycle cannot be accounted for by the liberalization, and subsequent tightening, of credit standards in mortgage markets observed during the same period. We base this conclusion on a quantitative dynamic general equilibrium model calibrated using macroeconomic aggregates and microeconomic data from the Survey of Consumer Finances. From the perspective of the model, the credit cycle is more likely due to factors that impacted house prices more directly, thus affecting the availability of credit through a collateral channel. In either case, the macroeconomic consequences of leveraging and deleveraging are relatively minor, because the responses of borrowers and lenders roughly wash out in the aggregate.

Keywords: Collateral constraints; Financial liberalization; House prices; Household debt (search for similar items in EconPapers)
JEL-codes: E20 E21 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

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Related works:
Journal Article: Household leveraging and deleveraging (2015)
Working Paper: Household leveraging and deleveraging (2013)
Working Paper: Household Leveraging and Deleveraging (2013)
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