The paper below is referenced on The Jolly Swagman Podcast #113 with John Hempton (Dec 21, 2020). Hempton gives fantastic interviews:
https://josephnoelwalker.com/113-what-i-learned-in-2020-john-hempton/
Read this abstract:
We propose a theory of indebted demand, capturing the idea that large debt burdens lower aggregate demand, and thus the natural rate of interest. At the core of the theory is the simple yet under-appreciated observation that borrowers and savers differ in their marginal propensities to save out of permanent income. Embedding this insight in a two-agent perpetual-youth model, we find that recent trends in income inequality and financial deregulation lead to indebted household demand, pushing down the natural rate of interest. Moreover, popular expansionary policies—such as accommodative monetary policy—generate a debt-financed short-run boom at the expense of indebted demand in the future. When demand is sufficiently indebted, the economy gets stuck in a debt-driven liquidity trap, or debt trap. Escaping a debt trap requires consideration of less conventional macroeconomic policies, such as those focused on redistribution or those reducing the structural sources of high inequality.
https://scholar.harvard.edu/files/straub/files/mss_indebteddemand.pdf
I am going to try to make sense of this later after reading the paper in greater detail…