Did Import Competition Boost Household Debt Demand?

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

No 20180117, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In the years preceding the Great Recession, the United States experienced a dramatic rise in household debt and an unprecedented increase in import competition. In a recent staff report, we outline a link between these two seemingly unrelated phenomena. We argue that the displacement of workers exposed to import competition fueled their demand for mortgage credit, which left many households more vulnerable to the eventual downturn in the housing market.

Keywords: trade; mortgages; household finances (search for similar items in EconPapers)
JEL-codes: F00 (search for similar items in EconPapers)
Date: 2018-01-17
New Economics Papers: this item is included in nep-int and nep-ure
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