During the Great Recession, the collapse of consumption across the U.S. varied greatly but systematically with house …-price declines. We find that financial distress among U.S. households amplified the sensitivity of consumption to house-price shocks …-estimated-dynamic model to measure the financial distress channel, we find that these two facts amplify the aggregate drop in consumption by 7 …

, the paper analyzes the impact of a monetary policy shock on households' current consumption and durable expenditures … depends on their debt and income levels. In particular, households with higher debt tend to reduce their current consumption …