Household Debt: Facts, Puzzles, Theories, and Policies
37 Pages Posted: 10 Sep 2014
Date Written: September 2014
Borrowing decisions affect most households, with large stakes and implications for subfields as varied as macroeconomics and industrial organization. I review theoretical and empirical work on household debt: its prevalence, level, growth, and composition, as well as various measures of consumer choice and market (in)efficiency, elasticities, and prices, including new evidence on how borrowing heterogeneity affects the distribution of the opportunity cost of consumption. I also discuss opportunities and challenges in policy evaluation. A key takeaway is that puzzles outstrip stylized facts, and I highlight numerous avenues for further research.
Keywords: consumer credit, consumer debt, household liabilities, household balance sheet, household finance, consumer finance
JEL Classification: D03, D14, D18, D82, D83, D91, E21, E32, G01, G02, G11, G21, G23, G28, R31
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