Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts

Jason Brown

Journal of Money, Credit and Banking, 2021, vol. 53, issue 7, 1629-1675

Abstract: Consumer debt is an important vehicle for smoothing through income shocks. I study localized income shocks from oil and gas development to investigate consumer response. Using quarterly information on consumer debt and oil and gas activity between 2000 and 2016, I find that consumer debt increased at a peak of $660 per capita, equivalent to 1.3% of median household income in counties with shale endowment and increased drilling. Shocks to local wages via drilling revealed a marginal propensity to borrow of 0.45. Relative to areas with oil and gas development experience, the marginal propensity to borrow was two times larger in previously undeveloped areas.

Date: 2021
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https://doi.org/10.1111/jmcb.12842

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Working Paper: Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:53:y:2021:i:7:p:1629-1675

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