« Three questions on the transmission of business cycles | Main | Gasoline Prices »


Feed You can follow this conversation by subscribing to the comment feed for this post.

That second graph doesn't tell us much, though. I can decrease my liabilities-to-disposable-income by moving into a converted storage unit with a space heater and eating nothing but Ramen Noodles. Liabilities plummet, disposable income skyrockets, quality of life goes down the crapper.

I am more interested in the ratio of liabilities to either wealth or total income. That is *almost* what your first graph tells us, but only in a roundabout way. Presumably disposable income is something like (1 - X)y, where X is the percentage of non-disposable income and y is income.

Now that would tell us something. These graphs seem to be camouflaging all the good info.


To what extent are the differences in private net debt a function of different age structures? It strikes me that some of those countries are much older than others (Italy and Japan at one end, the US and Canada at the other). All else being equal, you'd expect older countries to have more assets (up to a point, I suppose, at some point they start running their wealth down) and less debt.

IIRC, Italians save much more before buying a house than we do, and live with their parents, as my Italian friends do. Most of these savings are in the form of government bonds, Italians using the gov't as a bank. That's why the panic about "high" Italian gov't debt is so misplaced.

That is a good point - Italy does apparently have an old demographic structure (I guess relative to Canada or the US) and there have been concerns about population decline. They have also had some recent immigration though I'm not sure it has been enough to offset the issues of aging.

Maybe I'm confused but isn't the first graph just measuring leverage? Is more leverage a good thing?

I'm not sure net worth/disposable income means much of anything. For example, if your disposable income goes down, that ratio goes up. Bet Italian disposable income went down more than net worth.

The comments to this entry are closed.

Search this site

  • Google

Blog powered by Typepad