Using detailed micro data, we document that households often use "stimulus" checks to pay down debt, especially those … otherwise standard incomplete markets model. Because interest rates rise with debt, borrowers have increasingly larger … incentives to use an additional dollar to reduce debt service payments rather than consume. Using our calibrated model, we then …

unaware of nominal-debt erosion. Once they receive information on the debt-erosion channel, households update upwards their … beliefs about nominal debt and their own real net wealth. These changes in beliefs causally affect actual consumption and … hypothetical debt decisions. Our findings suggest that real wealth mediates the sensitivity of consumption to inflation once …

We propose a theory of indebted demand, capturing the idea that large debt burdens by households and governments lower … accommodative monetary policy and deficit spending—generate a debt-financed short-run boom at the expense of indebted demand in the … future. When demand is sufficiently indebted, the economy gets stuck in a debt-driven liquidity trap, or debt trap. Escaping …

We use survey evidence on reported spending in hypothetical energy price shock scenarios to study novel features of the …

how subjective uncertainty is related to consumption behavior. Using unique data from the Survey of Consumer Expectations …

The public debt overhang spread across advanced countries, and the reform of the Stability and Growth Pact in the Euro … Zone, have revived the polarization between those who think that debt is always good and those who think that debt is … always bad. This paper presents a normative model of endogenous growth with debt-financed public capital. It is shown that no …

This paper studies the secular increase in U.S. household debt and its relation to growing income inequality and … financial fragility. We exploit a new household-level dataset that covers the joint distributions of debt, income, and wealth in … income growth played a central role in rising indebtedness. Debt-to-income ratios have risen most dramatically for households …

the household debt boom in the US between 1980 and 2007. We develop a tractable macroeconomic model with general social … comparisons in housing to show that changes in the distribution of income affect aggregate housing demand, aggregate debt and …-looking comparisons, rising inequality can rationalize a substantial share of the observed housing and debt boom. …