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RWP 17-05, May 2017; Revised March 2018

Local shocks in oil and gas development may lead consumers to increase their spending. Using quarterly information on consumer debt and oil and gas activity between 2000 and 2016, I find that consumer debt increased at a peak of $840 per capita, equivalent to 1.7 percent of median household income in counties with shale endowment and increased drilling. Shocks to local wages via drilling revealed a marginal propensity to consume from debt of 0.45. Relative to areas with oil and gas development experience, the marginal propensity to consume was 70 percent larger in previously undeveloped areas.

JEL Classification: D23, Q32, Q33, R11

Article Citation

  • Brown, Jason P. 2017. “Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts.” Federal Reserve Bank of Kansas City, Research Working Paper 17-05, May. Available at External Link


Jason P. Brown

Vice President and Economist

Jason Brown is a Vice President and Economist in the Economic Research Department of the Federal Reserve Bank of Kansas City. In this role, he oversees the regional research and …