Exploring Differences in Household Debt across Euro Area Countries and the US

Abstract

We use internationally comparable household-level data for the United States and 11 European economies to decompose cross-country differences in debt holdings into differences due to household characteristics and those arising from different economic environments. The data come from the US Survey of Consumer Finances and the newly available Household Finance and Consumption Survey. We find that US households show the highest prevalence of both collateralized and non-collateralized debt, and have comparatively large amounts of loans outstanding. Differences in household characteristics contribute relatively little to this outcome. In contrast, differences in economic environments play an important role, with US economic environment having been much more conducive to debt holdings. The Netherlands are the only European economy with, at least in parts, similarly favourable conditions.