Comments and Discussion

摘要

This paper by Karen Dynan analyzes data from the Panel Study of Income Dynamics (PSID) to test to what extent a debt overhang among indebted households is responsible for the reduction in aggregate demand during the Great Recession and the lackluster recovery. The paper exploits cross-sectional variation in exposure to the credit and housing boom of the 2000s and documents the following main results: first, homeowners in areas where many households are highly indebted (which are also areas of high home price growth) have experienced sharper declines in spending than other households; second, this decline in spending cannot be explained by a pure wealth effect and thus partly represents a pure debt overhang or deleveraging effect; third, highly indebted households are finding it difficult to reduce their debt, and this difficulty is leading to a sluggish recovery.