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Partially Disaggregated Household‐Level Debt Service Ratios: Construction, Validation, And Relationship To Bankruptcy Rates

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  • Joel A. Elvery
  • Mark E. Schweitzer

Abstract

Using individual‐level debt payments data from a credit bureau, we estimate debt service ratios by debt type for the United States. While highly correlated with the Board of Governors' national debt service ratio, we identify some required payments categories that vary substantively from the aggregate assumptions used in the Board's published data series. Estimating novel state and metropolitan statistical area (MSA)‐level debt service ratios, we show that debt service ratios rose dramatically during the 2000s housing boom in several of the most impacted states and MSAs. Our state‐level debt service ratios are shown to be useful in predicting state bankruptcy rates. (JEL D14, C8, E50)

Suggested Citation

  • Joel A. Elvery & Mark E. Schweitzer, 2020. "Partially Disaggregated Household‐Level Debt Service Ratios: Construction, Validation, And Relationship To Bankruptcy Rates," Contemporary Economic Policy, Western Economic Association International, vol. 38(1), pages 166-187, January.
    • Handle: RePEc:bla:coecpo:v:38:y:2020:i:1:p:166-187
    DOI: 10.1111/coep.12434
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    References listed on IDEAS

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    1. Jesse Bricker & Meta Brown & Simona Hannon & Karen M. Pence, 2015. "How Much Student Debt is Out There?," FEDS Notes 2015-08-07, Board of Governors of the Federal Reserve System (U.S.).
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    6. Mathias Drehmann & Mikael Juselius, 2012. "Do debt service costs affect macroeconomic and financial stability?," BIS Quarterly Review, Bank for International Settlements, September.
    7. Alan Greenspan & James Kennedy, 2008. "Sources and uses of equity extracted from homes," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(1), pages 120-144, spring.
    8. Atif Mian & Amir Sufi, 2009. "The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1449-1496.
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    Cited by:

    1. Agnieszka Strzelecka & Danuta Zawadzka, 2020. "Why Households Borrow Money? Socio-Economic Factors Affecting Households Debts: A Model Approach," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 820-839.

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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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