 The Effects of Household Debt on Consumption and Economic Growth (in Korean)Joung Ku Kang ()
No 2017-1, Working Papers from Economic Research Institute, Bank of Korea Abstract: This paper discusses the effects of household debt in the aspects of 'flow effect' arising in the course of changes in household debt size and 'stock effect' occuring due to the level of household loans, and then, empirically analyzes the effects using the Korean time series data and the OECD panel data. The result of empirical estimation with GMM reveals that the flow effect of household debt facilitates consumption and economic growth while the stock effect hinders them. It is also found that the contribution of the flow effect on raising consumption and economic growth has decreased since 2000, however the contribution of the stock effect on impeding consumption and economic growth has expanded. The coefficients of flow effect and stock effect may change over time. Since the global financial crisis, the coefficient of flow effect has been scaled down, mainly because of the expansion of household mortgage loans that brought about a reduction in the share of household borrowing for consumption. The coefficient of stock effect has also decreased in size as the burden of household loan repayment was mitigated due to a fall in interest rates on household loans. Keywords: Household debt; Consumption; Economic growth (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bok:wpaper:1701 Access Statistics for this paper More papers in Working Papers from Economic Research Institute, Bank of Korea Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.