Exploring Differences in Household Debt Across the United States and Euro Area Countries

47 Pages Posted: 3 Nov 2020

See all articles by Dimitris Christelis

Dimitris Christelis

Adam Smith Business School, University of Glasgow; Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II; Center for Financial Studies (CFS); Netspar

Michael Ehrmann

European Central Bank (ECB); Bank of Canada

Dimitris Georgarakos

European Central Bank (ECB) - Directorate General Research; Center for Financial Studies (CFS)

Date Written: October 1, 2020

Abstract

Household debt in the United States has played a central role in the up-run and the aftermath of the global financial crisis. Despite this, our understanding of household debt and potential debt overhang is still limited. To shed light on this issue, we put U.S. household leverage in an international perspective, using household-level data for the United States and ten euro area economies. U.S. households have the highest prevalence of collateralized and non-collateralized debt, hold comparatively large amounts of loans, and face a higher debt-service burden, even though they have higher income and financial wealth. These differences are mainly related to the U.S. economic environment, which appears to be more conducive to both types of debt, primarily because a given level of collateral is associated with higher prevalence of collateralized debt, and larger amounts of it, in the United States.

Keywords: counterfactual decompositions, debt burden, Household Debt, household finance

JEL Classification: D12, E21, G11

Suggested Citation

Christelis, Dimitrios and Ehrmann, Michael and Georgarakos, Dimitris, Exploring Differences in Household Debt Across the United States and Euro Area Countries (October 1, 2020). CEPR Discussion Paper No. DP15368, Available at SSRN: https://ssrn.com/abstract=3723557

Dimitrios Christelis (Contact Author)

Adam Smith Business School, University of Glasgow ( email )

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HOME PAGE: http://www.gla.ac.uk/schools/business/staff/dimitrioschristelis/

Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II ( email )

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Center for Financial Studies (CFS) ( email )

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Netspar ( email )

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Netherlands

Michael Ehrmann

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344/7327 (Phone)
+49 69 1344/6000 (Fax)

Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

Dimitris Georgarakos

European Central Bank (ECB) - Directorate General Research ( email )

Sonnemannstrasse 20
Frankfurt am Main, 60314
Germany

Center for Financial Studies (CFS) ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

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