Empirical paper that tries to quantify the effect of import competition on the composition of the balance sheet of individuals between 2000 and 2007.

The main finding is that consumers in regions with higher exposure to import competition had debt growth of 20 percentage points more than consumers in regions with low import competition exposure.

Data

• New york FRB consumer credit panel: 5% of all US individuals with a credit record and social security number. Data is measured at a quarterly frequency. The important features for this study are a breakdown of household debt into mortgages, home equity credit, auto loans, credit card debt, and other loans. There is also limited demographic data such as the age, credit score, and zip code of participants.
• Census and IRS data to compute regional demographics
• House prices from CoreLogic
• Employment data from BLS
• Home Mortgage Disclosure Act data. the consumer credit panel doesn’t show what people did with rising debt. The authors here adopt the methodology explained in the paper Don presented last week
• PSID: track household income and debt over time
• Building Permits survey BPS: capture change in mortgages due to new house purchases
• Peter Schott’s database of shipping costs as a percentage of sale price at the product level

Strategy

Results