Review of 'House of Debt' by Atif Mian & Amir Sufi

Pakistan Development Review, vol 52, #3, Forthcoming

14 Pages Posted: 2 Nov 2014 Last revised: 21 Nov 2014

See all articles by Asad Zaman

Asad Zaman

Al-Nafi; Akhuwat University

Date Written: October 31, 2014


This is a review and a summary of some of the key arguments presented by Mian and Sufi in their recent book “House of Debt.” It highlights the contribution of Mian and Sufi by showing how they have solved the mystery of why there was a huge drop in aggregate demand during the Great Depression of 1929 and also following the recent Global Financial Crisis of 2007-8. The article shows how major economists like Keynes, Friedman, Lucas and others tried and failed to provide an adequate explanation of this mystery. The key to the mystery is the huge amount of levered debt present during both of these economic crises. The solution suggested by Mian and Sufi is to replace interest based debt by equity based contracts in financial markets. This solution resonates strongly with Islamic teachings on finance. These links are also highlighted in this article.

Keywords: Great Depression, Global Financial Crisis, Debt-Deflation, Levered Debt

JEL Classification: B22, E12, E32

Suggested Citation

Zaman, Asad, Review of 'House of Debt' by Atif Mian & Amir Sufi (October 31, 2014). Pakistan Development Review, vol 52, #3, Forthcoming, Available at SSRN:

Asad Zaman (Contact Author)

Al-Nafi ( email )

64 Fullerton Crecent
Markham, Ontario L35 3G5

Akhuwat University ( email )

Ferozepur Road
Kasur, Punjab 55110
55110 (Fax)


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