The Credit-Driven Household Demand Channel

Transcription

1 The Credit-Driven Household Demand Channel Atif Mian Princeton University Nobel Symposium On Money and Banking May 24, / 22

2 2 / 22

3 10 United States Unemployment, ALNC GA ID SC RI CO IN UT ORWA NJ WV MS KY CT DE MD WY LA DC OH NMMO TN IL TX MI MT NY HI ME AR PAWI MA VA OK KS SD IA MN NH NE VT AK ND HH debt to GDP, Source: Mian and Sufi (IMF, 2010). FL NV AZ CA

4 10 United States 15 World Unemployment, ALNC GA ID SC RI CO IN UT ORWA NJ WV MS KY CT DE MD WY LA DC OH NMMO TN IL TX MI MT NY HI ME AR PAWI MA VA OK KS SD IA MN NH NE VT AK FL NV AZ CA Unemployment, ESP USA GRC HUN DNK ITA SWE PRT MEXTUR CZECAN JPN CHE AUS AUT BEL FRA FIN GBR NOR HKG KOR NLD SGP THA POL DEU IDN IRL 0 ND HH debt to GDP, Source: Mian and Sufi (IMF, 2010) HH debt to GDP, Source: Mian, Sufi, and Verner (QJE, 2017).

5 10 United States 15 World Unemployment, ALNC GA ID SC RI CO IN UT ORWA NJ WV MS KY CT DE MD WY LA DC OH NMMO TN IL TX MI MT NY HI ME AR PAWI MA VA OK KS SD IA MN NH NE VT AK FL NV AZ CA Unemployment, ESP USA GRC HUN DNK ITA SWE PRT MEXTUR CZECAN JPN CHE AUS AUT BEL FRA FIN GBR NOR HKG KOR NLD SGP THA POL DEU IDN IRL 0 ND HH debt to GDP, Source: Mian and Sufi (IMF, 2010) HH debt to GDP, Source: Mian, Sufi, and Verner (QJE, 2017). The credit-driven household demand channel 3 / 22

6 10 United States 15 World Unemployment, ALNC GA ID SC RI CO IN UT ORWA NJ WV MS KY CT DE MD WY LA DC OH NMMO TN IL TX MI MT NY HI ME AR PAWI MA VA OK KS SD IA MN NH NE VT AK FL NV AZ CA Unemployment, ESP USA GRC HUN DNK ITA SWE PRT MEXTUR CZECAN JPN CHE AUS AUT BEL FRA FIN GBR NOR HKG KOR NLD SGP THA POL DEU IDN IRL 0 ND HH debt to GDP, Source: Mian and Sufi (IMF, 2010) HH debt to GDP, Source: Mian, Sufi, and Verner (QJE, 2017). The credit-driven household demand channel credit supply household aggregate demand future GDP growth. 3 / 22

7 Outline Evidence from business cycles internationally, as well as regional business cycles within the U.S., over the last half-century International evidence - including a new out of sample test of previous findings A natural experiment using the U.S. banking deregulation wave from the 1980s U.S. regional evidence from the Great Recession Implications of the credit-driven household demand channel for Macroeconomic theory and long run fundamentals Public policy (monetary policy, macro-prudential policy, and crisis response) 4 / 22

8 Empirical Challenges How to isolate credit supply expansion? in quantity and in spreads, deregulation/policy experiments, differential pass-through of global shocks (e.g. oil, securitization, savings glut) How to identify change in household aggregate demand? Focus on nontradable/tradable sectors, relative size and prices Asymmetry between household and non-financial firm credit Use of micro data and regional variation 5 / 22

9 International Evidence GDP Response to HH Debt Shock Years after Shock Source: Mian, Sufi, and Verner (QJE, 2017) GDP Response to NF Debt Shock Years after Shock Source: Mian, Sufi, and Verner (QJE, 2017) 6 / 22

10 International Evidence MSV Countries (1) (2) (3) (4) ) (5) ) (6) 3 sit MC 3 ln 3 ln 3 y i,t+4 3 C it Y it 3 NX it Y it 3 dit HH (0.024) (0.051) (0.025) 3 dit F (0.012) (0.031) (0.021) Country fixed effects R Observations Standard errors in parentheses 30 countries, Source: Mian, Sufi, and Verner (QJE, 2017). + p < 0.1, p < 0.05, p < 0.01 ( L NT it L T it ( P NT it P T it 7 / 22

11 International Evidence MSV Countries (1) (2) (3) (4) ) (5) ) (6) 3 sit MC 3 ln 3 ln 3 y i,t+4 3 C it Y it 3 NX it Y it ( L NT it L T it ( P NT it P T it 3 dit HH (0.024) (0.051) (0.025) (0.056) (0.097) 3 dit F (0.012) (0.031) (0.021) (0.064) (0.059) Country fixed effects R Observations Standard errors in parentheses 30 countries, Source: Mian, Sufi, and Verner (QJE, 2017). + p < 0.1, p < 0.05, p < / 22

12 International Evidence MSV Countries (1) (2) (3) (4) ) (5) ) (6) 3 sit MC 3 ln 3 ln 3 y i,t+4 3 C it Y it 3 NX it Y it ( L NT it L T it ( P NT it P T it 3 dit HH (0.024) (0.051) (0.025) (0.056) (0.097) (0.089) 3 dit F (0.012) (0.031) (0.021) (0.064) (0.059) (0.038) Country fixed effects R Observations Standard errors in parentheses 30 countries, Source: Mian, Sufi, and Verner (QJE, 2017). + p < 0.1, p < 0.05, p < / 22

13 International Evidence MSV Countries IMF2018 Additional 105 Countries (1) (2) (3) (4) ) (5) ) (6) (7) 3 sit MC 3 ln 3 ln 3 y i,t+4 3 y i,t+4 3 C it Y it 3 NX it Y it 3 dit HH (0.024) (0.051) (0.025) (0.056) (0.097) (0.089) (0.17) 3 dit F (0.012) (0.031) (0.021) (0.064) (0.059) (0.038) (0.0072) Country fixed effects R Observations Standard errors in parentheses 30 countries, Source: Mian, Sufi, and Verner (QJE, 2017). + p < 0.1, p < 0.05, p < 0.01 ( L NT it L T it ( P NT it P T it 8 / 22

14 Rise in household leverage predicts GDP slowdown 40 MSV Countries IMF2018 Additional 105 Countries GDP growth, t to t Household Debt to GDP Expansion, t 4 to t 1 Source: Mian, Sufi, and Verner (QJE, 2017). 9 / 22

15 Deregulation experiment in the 1980s in U.S. 250 Total Bank Credit Early Deregulation Late Deregulation Source: Mian, Sufi, and Verner (WP, 2018). 10 / 22

16 Deregulation experiment in the 1980s in U.S. 250 Total Bank Credit Early Deregulation Late Deregulation 100 Unemployment Rate Source: Mian, Sufi, and Verner (WP, 2018) Source: Mian, Sufi, and Verner (WP, 2018). 10 / 22

17 Local demand and NT / T sector expands Non Tradable Employment Growth, NH GA ME NC SCVA FL VT AZ MI TN MD NV AL RI KY AR HI IN MO WA MACANJ PA CT OH MNMS UT OR AK NY NM WI IL KS NE ID DC IA WV CO TX 0.00 MT ND LA OK 0.10 WY Deregulation exposure Source: Mian, Sufi, and Verner (WP, 2018). 11 / 22

18 Local demand and NT / T sector expands Non Tradable Employment Growth, FL MI TN KY AR HI IN MO WA MNMS OR NM WI IL KS NE IA WV CO TX MT ND LA OK WY NH GA AL VT NC SCVA AZ MD NVRI MACANJ PA CT OH UT ID DC AK NY Deregulation exposure Source: Mian, Sufi, and Verner (WP, 2018). ME Tradable Employment Growth, AR NM MNMS ND FL KY MT WI MI IA KSIN MO CO NE HI NH LA IL OK TX WY WV WA OR AZ UT GA AL TN CA VT ID NV NC VA SC OH MDRI AK MA DC NJ CT NY PA Deregulation exposure Source: Mian, Sufi, and Verner (WP, 2018). ME 11 / 22

19 Local demand and NT / T price rises 0.35 Non tradable CPI Inflation, NH MA MD NJ CT ME CA NY 0.25 HI PA GA 0.20 MI IN IL OR WI KS MO MN KY WA OH 0.15 CO TX FL Deregulation exposure (Alaska excluded) Source: Mian, Sufi, and Verner (WP, 2018). 12 / 22

20 Local demand and NT / T price rises 0.35 Non tradable CPI Inflation, Tradable CPI Inflation, NH MA MD NJ CT CA NY ME CO HI MI IN IL OR WI KS MO MN KY WA TX FL PA GA Deregulation exposure (Alaska excluded) Source: Mian, Sufi, and Verner (WP, 2018). OH CO HI FL WI MNIL IN MONH TX MI KS KYWAOR GA CA CT NJ PAMA OH MD Deregulation exposure (Alaska excluded) Source: Mian, Sufi, and Verner (WP, 2018). NY ME 12 / 22

21 Rise in household leverage predicts depth of 1990/91 recession 6.00 Unemployment, RI MA CA NJ NH DC NY PA VT MD WV FL NC VA AK MI AZ NV OR SC OH IL HI IN WA TN GA WI ID TX AL KS CO IA LA KY MN NM MT OK MO ND UT MS NE AR WY ME CT HH Leverage, Source: Mian, Sufi, and Verner (WP, 2018). 13 / 22

22 U.S. experience during the 2000 s A large expansion in credit supply, Mian and Sufi (2009), (also see [1]) Credit expansion led to an increase in local demand and the non-tradable sector expanded, Di Maggio and Kermani (2017) When the music stops, Fisher s debt deflation dynamics take hold (see [2]) large fall in demand, Mian et al. (2013) fall in employment due to demand shortgage, Mian and Sufi (2014) foreclosure fire-sale externalities amplify the negative cycle, Mian et al. (2015) 14 / 22

23 The fall in demand.2 Expenditure, HH net worth, Source: Mian, Rao, and Sufi (QJE, 2013). 15 / 22

24 Fall in employment in response to demand Non Tradable Employment, HH net worth, Source: Mian and Sufi (ECMA, 2014) Tradable Employment, / 22

25 Fall in employment in response to demand Non Tradable Employment, HH net worth, Source: Mian and Sufi (ECMA, 2014) Tradable Employment, / 22

26 Theoretical implications of credit-driven household demand channel 18 / 22

27 Heterogeneity across borrowers and creditors matters as it interacts with frictions like ZLB & wage rigidity. e.g. Eggertsson and Krugman (2012), Farhi and Werning (2015), Guerrieri and Lorenzoni (2017), Schmitt-Grohé and Uribe (2016) ([3]) Ex-ante over-borrowing due to AD and pecuniary externalities (see [4]) MPC out of Housing Wealth by HH Leverage, MPB out of Housing Wealth by Credit Score, <= 30% 30% 50% 50% 70% 70% 90% > 90% Source: Mian, Rao, and Sufi (QJE, 2013). 0 < Source: Mian and Sufi (AER, 2011). 19 / 22

28 Systematic forecasting errors suggests departure from rational expectations with common beliefs (See [5]) Important to model heterogeneous beliefs and behavioral biases, e.g. Geanakoplos (2010), Gennaioli et al. (2012), López-Salido et al. (2017) ([6]) IMF WEO t to t+3 GDP Forecast Error KOR1998 HKG2003 TUR1994 SGP2003 SGP2009 HKG2004 CZE2004 TUR2009 SGP2004 TUR2003 NOR1993 NOR1994 TUR2002 TUR2001 CZE2003 HKG2002 POL2005 THA2002 FIN1997 FIN1996 DEU2009 NOR1995 USA1995 USA1996 HKG1998 USA1997 THA2001 SGP2008 CHE2009 NOR1992 HUN1995 TUR2004 IDN2009 TUR1995 FIN1995 HUN1994 SWE1996 SWE1997 HUN1997 ESP1996 CAN1997 CZE2002 CAN1998 FIN1993 FIN2003 SGP2005 CZE2005 FIN2004 KOR1993 AUS1996 GRC2002 NLD1995 CHE2005 NLD1996 GRC2003 THA1998 GRC2004 CAN1996 HKG2009 HUN1996 JPN2003 HKG2005 ESP1997 FRA1997 DEU2005 TUR1990 BEL1996 CHE2003 AUT2009 AUS1993 KOR1999 NOR1991 AUS1991 AUS1992 BEL1997 USA1994 AUT2005 THA2003 NOR1996 DEU2008 FIN1998 JPN2004 GBR1997 GBR1995 THA2009 MEX2004 AUT2004 USA1998 USA1993 GRC1998 POL2002 SWE1993 SWE1998 GBR1996 FRA1998 CAN2001 SGP2007 SWE1995 FIN1999 SWE1994 NOR1998 JPN2005 SWE1992 NOR1997 HUN1998 CHE2008 JPN2009 CZE1999 HUN1999 KOR2001 CAN2002 NOR2001 BEL2003 DEU1993 JPN2002 DEU2004 FIN1994 FRA1996 GBR1998 NOR2002 ESP1995 MEX2003 ITA1997 ITA1998 DEU2003 FRA1999 ITA1992 CHE2007 THA2000 TUR1993 GBR1994 BEL2004 CAN2003 AUT2003 ESP1998 GRC1999 GRC2000 CAN1999 POL2004 GRC2001 SWE2003 AUS1995 NOR2003 SGP2002 CHE2004 SWE2009 DNK2003 SWE2004 AUS1998 AUS1997 FIN2005 POL2006 NLD1994 HKG1994 HUN2003 NLD1997 PRT1996 DNK2004 PRT1995ESP2004 NOR2004 IDN2008 NOR1999 FRA1995 CAN1995 BEL2005 MEX2005 BEL1995 MEX2009 BEL1998 NOR2009 SWE1999 HUN2001 GBR1999 ITA1993 FRA2004 CAN2000 BEL1994 AUS1994 GBR1993 BEL1993 USA1992 FIN2001 FRA2003 FIN2002 SWE2001 USA1991 USA2001 HUN2002 USA2009 KOR1994 GBR2000 GBR2001 CAN2004 AUS2009 SWE2002 SGP1998 GBR1992 BEL2009 POL2003ESP2003 PRT1997 GRC2005 NLD2004 NLD2005 DNK1999 KOR1992 IDN2005 DNK2002 TUR2008 FIN2009 ESP1999 FRA2009 GBR2002 AUS1999 ESP2002 DNK1998 NOR2005 HKG2008 DEU1991 ITA1996 BEL2002 MEX1998 TUR1997 TUR1991 CZE2000 JPN1994 JPN1998 BEL2001 JPN2001 USA1999 IDN2007 FRA1993 FIN1992 ITA1999 AUT1999 HUN1993 ESP1993 HUN2000 CZE2001 TUR1992 FRA2001 DEU2007 KOR2000 DEU1992 MEX2002 ITA1995 JPN1999 SGP2006 ESP1994 TUR1996 JPN1993 FRA2002 PRT1993 ESP1992 AUS1990 NOR2000 AUT2001 POL2001 TUR2005 USA1990 AUT2002 BEL1999 FRA2005 IDN2006 NLD2009 CHE2006 USA2002 HKG2001 SGP1997 NLD2003 GBR2003 NLD1998 HKG1999 POL2009 SWE2005 KOR2009 FIN2000 KOR2006 ITA1994 USA2000 SWE1991 THA2004 SWE2000 FRA1994 CAN1994 ITA2004 ITA2005 ITA2009 DNK2001 THA2005 BEL2008 PRT1994 DEU1998 DEU1997 GBR1991 USA2003 CAN2009 AUS2001 AUS2000 GBR2004 KOR2004 ESP2005 NOR1990 ESP2001 AUS2002 PRT1998 PRT2005 DNK2005 AUS2004AUS2005 ESP2000 HUN2004 AUS2003 AUS2008 NLD1999 KOR2003 GBR2005 AUS2006 KOR2005 CAN2005 DEU1994 BEL2000 ITA2003 POL2007 FRA2000 TUR1999 JPN2000 SGP2001 AUT2000 AUT2008 FRA1992 DEU2002 BEL1992 ITA2000 FRA1991 BEL2006 NOR2008 AUT2006 KOR2007 DEU1995 THA1999 FRA2008 DEU1996 GBR2009 DNK2000 POL2008 NOR2006 SGP1995 DEU1999 CAN1993 CAN1992 SWE2008 ITA2008 CZE2009 KOR2008 USA2004 DNK2009 KOR1990 KOR1991 ESP2009 PRT2004 DEU2006 JPN2008 DEU1990 ITA1991 JPN1995 BEL1991 ITA2001 BEL2007 KOR2002 CAN1991 USA2008 PRT1999 AUS2007 CAN2008 DEU2001 SGP1996 THA2007 MEX2008 KOR1997 SGP1999 ITA2002 PRT2009 NLD2008 HUN2005 PRT2008 NLD2002 HUN2009 USA2005 PRT2003 NLD2001 GRC2006NLD2006 DNK2008 HKG1997 BEL1990 AUT2007CAN2007 CAN1990 SWE2007 PRT2006 NLD2000 GBR1990 HKG2007 MEX2001 ITA1990NOR2007 ESP1991 FRA2006 JPN2007 MEX1999 JPN1997 FIN1991 GBR2008 FRA2007 ESP1990 JPN1990 DEU2000 PRT2007 NLD2007 PRT2002 HKG2006 THA2008 PRT1992 MEX2007 JPN1996 POL1999 FRA1990 CZE2006 CAN2006 HKG2000 ESP2008 JPN1992 ITA2006 JPN1991 ITA2007 FIN2008 USA2007 ESP2006 PRT2001 PRT2000 POL2000 JPN2006 TUR2000 PRT1990 THA2006 SWE2006 TUR2007 SWE1990 GBR2007 GBR2006 FIN2006 USA2006 DNK2007 HKG1995 MEX2006 HKG1996 CZE2008 FIN2007 DNK2006 PRT1991 ESP2007 MEX2000 CZE2007 HUN2008 KOR1996 GRC2007 TUR1998 SGP2000 TUR2006 HUN2007 HUN2006 KOR1995 FIN1990 THA1997 THA1996 THA1995 GRC2009 GRC Household Debt to GDP Expansion, t 4 to t 1 Source: Mian, Sufi, and Verner (QJE, 2017) IRL2009 IRL2008 IRL2006 IRL / 22

29 Is there a link between secular rise in household credit, Jordà et al. (2016), falling interest rate and rising inequality and savings glut? (see [7]) 2 bot 99% top 1% 1.5 Debt to Income Year Source: Mian and Sufi (WP, 2018). 21 / 22

30 Public policy implications of credit-driven household demand channel Post-2007 policy should have focused on reducing household debt service payments and preventing foreclosures (see [8]). Mortgage design matters, more equity-like contracts that promote risk-sharing have benefits at the macro level Monetary policy pass-through depends on the credit-driven household demand channel, e.g. Di Maggio et al. (2017) UK and many other countries have since adopted macro-prudential regulations that impose constraints based on loan to value or debt service to income 22 / 22

31 Notes 1. Adelino et al. (2014), Demyanyk and Van Hemert (2011), Favara and Imbs (2015), Justiniano et al. (2015, 2017), Keys et al. (2010), Levitin and Wachter (2012), Mian and Sufi (2009, 2017) 2. Andersen et al. (2014), Bahadir and Gumus (2016), Bunn and Rostom (2015), Drehmann et al. (2017), Giroud and Mueller (2017), Glick and Lansing (2010), IMF (2012, 2017), Di Maggio and Kermani (2017), Martin and Philippon (2014), Mian and Sufi (2010, 2011, 2014), Mian et al. (2013, 2017a,b), Verner and Gyongyosi (2017) 3. Eggertsson and Krugman (2012), Farhi and Werning (2015), Guerrieri and Lorenzoni (2017), Huo and Ríos-Rull (2016), Korinek and Simsek (2016), Lorenzoni (2008), Schmitt-Grohé and Uribe (2016) 1 / 10

32 Notes 4. Agarwal et al. (2017, 2018), Aladangady (2014), Baker (2018), Cloyne et al. (2017), Di Maggio et al. (2017), Ganong and Noel (2017a,b), Jordà et al. (2014), Liu et al. (2018), Mian and Sufi (2018b, Forthcoming) 5. Mian et al. (2017b), Baron and Xiong (2016) 6. Baron and Xiong (2016), Bordalo et al. (2017), Burnside et al. (2017), Geanakoplos (2010), Gennaioli et al. (2012), Kindleberger (1978), Kindelberger and Aliber (2005), Krishnamurthy and Muir (2016), López-Salido et al. (2017), Mian and Sufi (2018a), Minsky (2008), Nathanson and Zwick (2017) 7. Favilukis et al. (2012), Jordà et al. (2016), Kumhof et al. (2015) 8. Agarwal et al. (2018), Aladangady (2014), Cloyne et al. (2017), Di Maggio et al. (2017), Jordà et al. (2014, 2013), Ganong and Noel (2017b), Mian and Sufi (2015) 2 / 10

33 References I Adelino, Manuel, Antoinette Schoar, and Felipe Severino, Credit supply and house prices: Evidence from mortgage market segmentation, Available at SSRN , Agarwal, Sumit, Gene Amromin, Itzhak Ben-David, Souphala Chomsisengphet, Tomasz Piskorski, and Amit Seru, Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program, Journal of Political Economy, 2017, 125 (3)., Souphala Chomsisengphet, Neale Mahoney, and Johannes Stroebel, Do Banks Pass Through Credit Expansions to Consumers Who Want to Borrow? Evidence from Credit Cards, Quarterly Journal of Economics, 2018, 133 (1), Aladangady, Aditya, Homeowner Balance Sheets and Monetary Policy, FEDS Working Paper, Federal Reserve Board Andersen, Asger L., Charlotte Duus, and Thais L. Jensen, Household Debt and Consumption During the Financial Crisis: Evidence from Danish Micro Data, Working Paper. Bahadir, Berrak and Inci Gumus, Credit decomposition and business cycles in emerging market economies, Journal of International Economics, 2016, 103, Baker, Scott R, Debt and the Response to Household Income Shocks: Validation and Application of Linked Financial Account Data, Journal of Political Economy, / 10

34 References II Baron, Matthew and Wei Xiong, Credit expansion and neglected crash risk, National Bureau of Economic Research, Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer, Diagnostic Expectations and Credit Cycles, Journal of Finance, Bunn, Philip and May Rostom, Household Debt and Spending in the United Kingdom, Bank of England Working Paper. Burnside, Craig, Martin Eichenbaum, and Sergio Rebelo, Understanding Booms and Busts in Housing Markets, Journal of Political Economy, 2017, 124, Cloyne, James, Clodomiro Ferreira, and Paolo Surico, Monetary Policy When Households Have Debt: New Evidence on the Transmission Mechanism, Demyanyk, Yuliya and Otto Van Hemert, Understanding the subprime mortgage crisis, Review of financial Studies, 2011, 24 (6), Di Maggio, Marco, Amir Kermani, Benjamin J. Keys, Tomasz Piskorski, Ramcharan Rodney, Amit Seru, and Vincent Yao, Interest Rate Pass-Through: Mortgage Rates, Household Consumption, and Voluntary Deleveraging, American Economic Review, 2017, 107 (11), and, Credit-induced boom and bust, The Review of Financial Studies, November 2017, 30 (11), / 10

35 References III Drehmann, Mathias, Mikael Juselius, and Anton Korinek, Accounting for debt service: the painful legacy of credit booms, BIS Working Papers No 645 June Eggertsson, Gauti B. and Paul Krugman, Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach, Quarterly Journal of Economics, 2012, 127 (3), Farhi, Emmanuel and Iván Werning, A Theory of Macroprudential Policies in the Presence of Nominal Rigidities, Working Paper. Favara, Giovanni and Jean Imbs, Credit supply and the price of housing, The American Economic Review, 2015, 105 (3), Favilukis, Jack, David Kohn, Sydney C Ludvigson, and Stijn Van Nieuwerburgh, International capital flows and house prices: Theory and evidence, in Housing and the Financial Crisis, University of Chicago Press, 2012, pp Ganong, Peter and Pascal Noel, Consumer Spending During Unemployment: Positive and Normative Implications, Working Paper. and, The Effect of Debt on Default and Consumption: Evidence from Housing Policy in the Great Recession, Working Paper. Geanakoplos, John, The Leverage Cycle, NBER Macroeconomics Annual 2009, Volume 24, April 2010, pp / 10

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37 References V Jordà, Òscar, Moritz Schularick, and Alan M Taylor, The great mortgaging: housing finance, crises and business cycles, Economic Policy, 2016, 31 (85), Justiniano, Alejandro, Giorgio E. Primiceri, and Andrea Tambalotti, Credit Supply and the Housing Boom, Working Paper 20874, National Bureau of Economic Research January 2015.,, and, The Mortgage Rate Conundrum, Working Paper. Keys, Benjamin J, Tanmoy Mukherjee, Amit Seru, and Vikrant Vig, Did securitization lead to lax screening? Evidence from subprime loans, The Quarterly journal of economics, 2010, 125 (1), Kindelberger, Charles P and Robert Z Aliber, Manias, panics and crashes: A history of financial crises, Palgrave Macmillan, Kindleberger, Charles, Manias, Panics and Crashes: A history of financial crises, New York, Basic Books, Korinek, Anton and Alp Simsek, Liquidity trap and excessive leverage, The American Economic Review, 2016, 106 (3), Krishnamurthy, Arvind and Tyler Muir, How credit cycles across a financial crisis, Working paper, / 10

38 References VI Kumhof, Michael, Romain Ranciere, and Pablo Winant, Inequality, Leverage, and Crises, American Economic Review, 2015, 105, Levitin, Adam J. and Susan M. Wachter, Explaining the Housing Bubble, Working Paper. Liu, Ernest, Atif Mian, and Amir Sufi, Low Interest Rates, Market Power and Productivity Growth, López-Salido, David, Jeremy C Stein, and Egon Zakrajšek, Credit-market sentiment and the business cycle, The Quarterly Journal of Economics, 2017, p. qjx014. Lorenzoni, Guido, Inefficient Credit Booms, The Review of Economic Studies, 2008, 75 (3), Martin, Philippe and Thomas Philippon, Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone, Working Paper. Mian, Atif, Amir Sufi, and Francesco Trebbi, Foreclosures, house prices, and the real economy, The Journal of Finance, 2015, 70 (6), and, The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis, The Quarterly Journal of Economics, 2009, 124 (4), pp and, Household Leverage and the Recession of , IMF Economic Review, 2010, 58 (1), / 10

39 References VII and, House Prices, Home Equity-Based Borrowing, and the US Household Leverage Crisis, American Economic Review, August 2011, 101 (5), and, What Explains the Drop in Employment?, Econometrica, 2014, 82 (6), and, House of debt: How they (and you) caused the Great Recession, and how we can prevent it from happening again, University of Chicago Press, and, Fueling a Frenzy: Private Label Securitization and the Housing Cycle of 2000 to 2010, Working Paper and, Inequality, Surplus Savings and Credit Creation, and, Finance and Business Cycles: The Credit-Driven Household Demand Channel, Journal of Economic Perspectives, Forthcoming., Kamalesh Rao, and Amir Sufi, Household Balance Sheets, Consumption, and the Economic Slump, The Quarterly Journal of Economics, 2013, 128 (4), Mian, Atif R, Amir Sufi, and Emil Verner, Credit Supply and Business Cycle Ampli cation: Evidence from Banking Deregulation in the 1980s, 2017.,, and, Household debt and business cycles worldwide, forthcoming, Quarterly Journal of Economics, / 10

40 References VIII and, Household Debt and Defaults from 2000 to 2010: The Credit Supply View, Evidence and Innovation in Housing Law and Policy, Minsky, Hyman P, Stabilizing an unstable economy, Vol. 1, McGraw-Hill New York, Nathanson, Charles G. and Eric Zwick, Arrested Development: Theory and Evidence of Supply-Side Speculation in the Housing Market, National Bureau of Economic Research June Schmitt-Grohé, Stephanie and Martín Uribe, Downward Nominal Wage Rigidity, Currency Pegs, and Involuntary Unemployment, Journal of Political Economy, Verner, Emil and Gyozo Gyongyosi, Household Debt Revaluation and the Real Economy: Evidence from a Foreign Currency Debt Crisis, / 10