Date of Award

January 2017

Document Type


Degree Name

Master of Science (MS)


Economics & Finance

First Advisor

Cullen Goenner


This study examines the effect of debt-servicing costs on subsequent expenditure growth. Quarterly expenditure data on US households from the US Labor Department’s Consumer Expenditure Survey are utilized in a typical regression framework, and an emphasis is placed on determining the effect of a positive change in a household’s debt-servicing costs on expenditure growth. Initial results reaffirm the literature in showing a negative relationship between leverage and expenditure growth. However, upon controlling for the change in each household’s debt-servicing costs, the strong relationship disappears, and instead, a strong negative relationship between positive changes in a household’s debt-servicing costs and subsequent expenditure growth is found to be the dominant force at play. Further work shows that the main results are robust across years of the sample and across groups of varying levels of liquidity constraint.