Line of Inquiry: Amir Sufi on household debt and business cycles

Jan 11, 2018

Sections Economics Video

What causes the ebbs and flows of the business cycle? In the first of two videos, Chicago Booth's Amir Sufi argues that one key factor is the financial sector and its willingness to lend. As credit becomes more and more available at the household level, the economy booms—but when household debt becomes unsustainable, it sows the seeds for a bust. For an explanation of how inequality may fuel credit-supply expansions, see part two of this series.