Consumption patterns of indebted households: unravelling the relevance of fiscal policy

Antonio Afonso and Eduardo Sá Fortes Leitão Rodrigues ()
Additional contact information
Eduardo Sá Fortes Leitão Rodrigues: Universidade Federal Rural Do Rio de Janeiro

International Journal of Economic Policy Studies, 2025, vol. 19, issue 1, No 2, 57 pages

Abstract: Abstract We have investigated the influence of fiscal instruments, notably taxes and government spending, on household consumption in two different samples and two measures of household debt to provide a comprehensive analysis of the topic. We used dynamic panel models and the Generalised Method of Moments (GMM) approach for 24 and 32 advanced and emerging countries from 1995 to 2020. Our findings show that fiscal impulses increase private consumption. However, when households are highly indebted, the effects are different, and the increase in public spending or the reduced taxes discourages household consumption compared to the baseline (lower debt) group. These results suggest a precautionary effect.

Keywords: Household consumption; Household debt; Fiscal policy; Panel data (search for similar items in EconPapers)
JEL-codes: C32 E58 E62 E63 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s42495-024-00141-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Consumption Patterns of Indebted Households: Unravelling the Relevance of Fiscal Policy (2023)
Working Paper: Consumption patterns of indebted households: unravelling the relevance of fiscal policy (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:ijoeps:v:19:y:2025:i:1:d:10.1007_s42495-024-00141-3

Ordering information: This journal article can be ordered from
https://www.springer ... policy/journal/42495

DOI: 10.1007/s42495-024-00141-3

Access Statistics for this article

International Journal of Economic Policy Studies is currently edited by Akira Maeda

More articles in International Journal of Economic Policy Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().