Household debt in the times of populism

Wei-Fong Pan

Journal of Economic Behavior & Organization, 2023, vol. 205, issue C, 202-215

Abstract: This study examines the effects of populism on household debt in 30 countries. Using a newly developed database of populist leaders, we observe that populism has a significantly negative effect on household debt, that is, households tend to hold less debt when populist leaders are in office than when non-populist ones are in office. We explore potential channels for this phenomenon. We observe that left-wing populism diminishes household debt by reducing household consumption while right-wing populism diminishes household debt by increasing public debt. Both types of populism decrease household debt by reducing lenders’ willingness to lend. Overall, our results suggest that populism is an important factor in explaining household debt dynamics.

Keywords: Populism; Private debt; Household debt; Bank credit; Public debt (search for similar items in EconPapers)
JEL-codes: E21 E44 F50 G21 G51 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:205:y:2023:i:c:p:202-215

DOI: 10.1016/j.jebo.2022.11.012

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