The Effects of Household Debt and Oil Price Shocks on Economic Growth in the Shadow of the Pandemic

Xiangfa Li (), Zhe Zhang, Weixian Xue and Hua Wang
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Xiangfa Li: School of Economics and Management, Xi’an University of Technology, Xi’an 710048, China
Zhe Zhang: School of Economics and Management, Xi’an University of Technology, Xi’an 710048, China
Weixian Xue: School of Economics and Management, Xi’an University of Technology, Xi’an 710048, China
Hua Wang: School of Foreign Studies, Xi’an Jiaotong University, Xi’an 710049, China

Sustainability, 2022, vol. 14, issue 22, 1-16

Abstract: In a sample of 34 countries during 1965Q2 to 2021Q3, this paper offers an empirical analysis of how household debt and oil price shocks influence economic growth in the shadow of the pandemic. We exploit the quarter lags inherent in the response of debt and the oil price to output to pin down the relationship between household debt, the oil price, and economic growth in an unrestricted panel VAR model. We find that household debt has a short-term positive impact on economic growth, and this impact is lagged, while oil price shocks have a negative effect on economic growth. Pandemic uncertainty has an obvious and positive effect on household debt, while it has an obvious and negative effect on economic growth and oil price. The results hold under several robustness tests.

Keywords: household debt; economic growth; unrestricted panel VAR model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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