Deleveraging of the household sector

Giorgio Primiceri

No 628, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: Household deleveraging is often cited as one of the key headwinds bearing on the US economy as it slowly recovers from the Great Recession of 2007-2009. We calibrate a general equilibrium model of this process of debt reduction, in which impatient households borrow from patient ones, using the value of their homes as collateral. In the model, an exogenous reduction in the loan-to-value ratio required by lenders, has sizable aggregate consequences only if the real interest rate cannot fall enough to induce the lenders to reduce their savings (as in a model with sticky prices and a zero lower bound for the nominal interest rate).

Date: 2012
New Economics Papers: this item is included in nep-dge
References: Add references at CitEc
Citations:

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2012/paper_628.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed012:628

Access Statistics for this paper

More papers in 2012 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann (chuichuiche@gmail.com).