Abstract

http://ssrn.com/abstract=2435966
 


 



The Microdynamics of the Household Balance Sheet in a Boom-Bust Housing Cycle


Fredrik Andersson


Office of the Comptroller of the Currency (OCC)

Tom Mayock


Office of the Comptroller of the Currency

May 12, 2014


Abstract:     
In this paper we provide what we believe to be the first evidence on the nature of leveraging and deleveraging behavior through an analysis of both net and gross credit flows at the consumer level. In the aggregate, we find that at all points in the economic cycle, there is a significant amount of simultaneous debt creation and debt destruction. The size of these credit flows varies significantly across housing markets.

In a regression analysis of consumer-level credit flows, we find an increase in housing values results in a net increase in leverage, but only in states with significant price appreciation. Consumers in low-appreciation states appear to have responded much differently to changes in housing values; whereas such consumers do appear to reshu­ffle debt across different credit instruments in response to housing price shocks, this reshu­ffling has only a negligible impact on net leverage.

Number of Pages in PDF File: 36

Keywords: Gross Credit Flows, Retail Credit, Home Equity

JEL Classification: D1, G1, R2

working papers series


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Date posted: May 14, 2014  

Suggested Citation

Andersson, Fredrik and Mayock, Tom, The Microdynamics of the Household Balance Sheet in a Boom-Bust Housing Cycle (May 12, 2014). Available at SSRN: http://ssrn.com/abstract=2435966 or http://dx.doi.org/10.2139/ssrn.2435966

Contact Information

Per Fredrik Daniel Andersson (Contact Author)
Office of the Comptroller of the Currency (OCC) ( email )
400 7th St. SW
Washington, DC 20219-0001
United States
202-649-5528 (Phone)
571-465-3246 (Fax)
Tom Mayock
Office of the Comptroller of the Currency ( email )
400 7th St Sw
Washington, DC 20219-0001
United States
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