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

Jason Brown

No RWP 17-05, Research Working Paper from Federal Reserve Bank of Kansas City

Abstract: Local shocks in oil and gas development may lead consumers to increase their spending. 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 $840 per capita, equivalent to 1.7 percent of median household income in counties with shale endowment and increased drilling. Shocks to local wages via drilling revealed a marginal propensity to consume from debt of 0.45. Relative to areas with oil and gas development experience, the marginal propensity to consume was 70 percent larger in previously undeveloped areas.

Keywords: Oil; Gas; income shocks; Consumer debt (search for similar items in EconPapers)
JEL-codes: D23 Q32 Q33 R11 (search for similar items in EconPapers)
Pages: 48
Date: 2017-05-01, Revised 2018-03-02
New Economics Papers: this item is included in nep-dcm and nep-ene
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Citations: View citations in EconPapers (1)

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Journal Article: Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts (2021)
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DOI: 10.18651/RWP2017-05

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