TY  - UNPD
A1  - Gyongyosi, Gyozo
A1  - Rariga, Judit
A1  - Verner, Emil
T1  - The anatomy of consumption in a household foreign currency debt crisis
T2  - SAFE working paper ; No. 332
N2  - This paper studies the consumption response to an increase in the domestic value of foreign currency household debt during a large depreciation. We use detailed consumption survey data that follows households for four years around Hungary’s 2008 currency crisis. We find that, relative to similar local currency debtors, foreign currency debtors reduce consumption approximately one-for-one with increased debt service, suggesting a role for liquidity constraints. We document a variety of margins of adjustment to the shock. Foreign currency debtors reduce both the quantity and quality of expenditures, consistent with nonhomothetic preferences and “flight from quality.” We find no effect on overall household labor supply, consistent with a weak wealth effect on labor supply. However, a small subset of households adjusts labor supply toward foreign income streams. Affected households also boost home pro- duction, suggesting a shift in consumption from money-intensive to time-intensive goods.
T3  - SAFE working paper - 332 
Y1  - 2021
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/61997
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-619973
UR  - https://ssrn.com/abstract=3989915
IS  - December 2021
PB  - SAFE
CY  - Frankfurt am Main
ER  -