Has Higher Household Indebtedness Weakened Monetary Policy Transmission?
IMF Working Papers, January 15, 2019
Source details
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- Has Higher Household Indebtedness Weakened Monetary Policy Transmission?
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Bibliographic details
- Authors: Gaston Gelos, Tommaso Mancini-Griffoli, Machiko Narita, Federico Grinberg, Umang Rawat, Shujaat Khan
- Published: January 15, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484393208.001
Authors and publication
- By Gaston Gelos, Tommaso Mancini-Griffoli, Machiko Narita, Federico Grinberg, Umang Rawat, Shujaat Khan
- January 15, 2019
- IMF Working Papers, Working Paper No. 2019/011
- Pages: 33
- Volume: 2019
- Issue: 011
- DOI: https://doi.org/10.5089/9781484393208.001
- Stock No: WPIEA2019011
- ISBN: 9781484393208
- ISSN: 1018-5941
Research question and approach
- Core question: Has monetary policy in advanced economies been less effective since the global financial crisis because of deteriorating household balance sheets?
- Data and scope: Uses household data from the United States.
- Comparative design: Compares the responsiveness of household consumption to monetary policy shocks in the pre- and post-crisis periods.
- Linkages examined: Relates changes in monetary transmission to changes in household indebtedness and liquidity.
Key findings
- The responsiveness of household consumption has diminished since the crisis.
- Household balance sheets are not the culprit for the weakened transmission.
- Households with higher debt levels and lower shares of liquid assets are the most responsive to monetary policy.
- The share of these highly responsive households in the population grew.
- Other factors, such as economic uncertainty, appear to have played a bigger role in the decline of households’ responsiveness to monetary policy.
Subject tags and keywords (as provided)
- Subject: Asset and liability management, Consumption, Debt burden, External debt, Household consumption, Income, Liquidity, National accounts
- Keywords: basis point, consumption, consumption growth, consumption response, Debt burden, Global, Household consumption, households, Income, leverage, Liquidity, Monetary policy, monetary policy effectiveness, monetary policy maker, monetary policy shock, monetary policy transmission, real estate, transmission, WP
Publication note
- Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Source: IMF Working Paper "Has Higher Household Indebtedness Weakened Monetary Policy Transmission?", January 15, 2019.
Content in this bundle
- Has Higher Household Indebtedness Weakened Monetary Policy Transmission?, WP/19/11, January 2019