"Fisher Dynamics" in US Household Debt, 1929-2011

J. W. Mason and Arjun Jayadev

American Economic Journal: Macroeconomics, 2014, vol. 6, issue 3, 214-34

Abstract: The evolution of debt-income ratios over time depends on income growth, inflation, and interest rates, independent of any changes in borrowing. We examine the effect of these "Fisher dynamics" on household debt-income ratios in the United States over the period 1929–2011. Adapting a standard decomposition of public debt to household sector debt, we show that these factors explain, in accounting terms, a large fraction of the changes in household debt-income ratios observed historically. More recently, debt defaults have also been important. Changes in household debt-income ratios over time cannot be straightforwardly interpreted as reflecting shifts in the supply and demand of household credit.

JEL-codes: D14 E21 E31 E43 H63 N32 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mac.6.3.214
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Citations: View citations in EconPapers (9)

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