Import competition and household debt

Jean-Noël Barrot, Erik Loualiche, Matthew Plosser and Julien Sauvagnat

No 821, Staff Reports from Federal Reserve Bank of New York

Abstract: We analyze the effect of import competition on household balance sheets from 2000 to 2007 using individual data on consumer finances. We exploit variation in exposure to foreign competition using industry-level shipping costs and initial differences in regions? industry specialization. We show that household debt increased significantly in regions where manufacturing industries are more exposed to import competition. A one standard deviation increase in exposure to import competition explains 30 percent of the cross-regional variation in household leverage growth, and is mostly driven by home equity extraction. Our results highlight the distributive effects of globalization and their consequences for household finances.

Keywords: trade; household finances; mortgages (search for similar items in EconPapers)
JEL-codes: D14 F6 G21 (search for similar items in EconPapers)
Date: 2017-08-15
New Economics Papers: this item is included in nep-ifn, nep-int and nep-ure
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Import Competition and Household Debt (2022)
Working Paper: Import Competition and Household Debt (2017)
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