Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246967 
Year of Publication: 
2013
Series/Report no.: 
EHES Working Papers in Economic History No. 36
Publisher: 
European Historical Economics Society (EHES), s.l.
Abstract: 
The Great Recession has focused renewed attention on the role of household leverage in the business cycle. Household debt overhang and the ensuing process of deleveraging are often cited as factors holding back economic recovery. This paper studies the relationship between household debt and economic performance during the Great Depression in the U.S. on the state level. Using a newly compiled dataset, I present evidence that debt overhang in the household sector acted as a severe drag on economic recovery in the 1930s. States with higher initial debt-to-income ratios recovered considerably slower. These findings point toward a close link between the accumulation of debt and the severity and duration of recessions.
Subjects: 
Great Depression
household debt
mortgage finance
U.S.
JEL: 
E2
E3
N22
R2
Document Type: 
Working Paper

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