Working Paper Revision

Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts

Abstract: Local shocks in oil and gas development may lead consumers to increase their spending. Using quarterly information on consumer debt and oil and gas activity between 2000 and 2016, I find that consumer debt increased at a peak of $840 per capita, equivalent to 1.7 percent of median household income in counties with shale endowment and increased drilling. Shocks to local wages via drilling revealed a marginal propensity to consume from debt of 0.45. Relative to areas with oil and gas development experience, the marginal propensity to consume was 70 percent larger in previously undeveloped areas.

JEL Classification: D23; Q32; Q33; R11;

https://doi.org/10.18651/RWP2017-05

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Research Working Paper

Publication Date: 2018-03-02

Number: RWP 17-05

Related Works

• Working Paper Revision (2018-03-02) : You are here.
• Working Paper Original (2017-05-01) : Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts