Does Household Borrowing Reduce the Trade Balance? Evidence from Developing and Developed Countries

Can Xu (), Jan Jacobs and Jakob de Haan
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Can Xu: University of Groningen

Open Economies Review, 2023, vol. 34, issue 4, No 1, 759-787

Abstract: Abstract We examine the dynamic impact of household borrowing on the trade balance using data from 32 developing countries and 36 developed countries over the 1980-2020 period. Our findings suggest that the impact of household borrowing on the trade balance is negative, both in the short and long run, but the effects are more pronounced in developing countries. Moreover, we find that for developing countries the negative effect of household borrowing on the trade balance is achieved via boosting imports. In developed countries, household borrowing stimulates both imports and exports, where the effect on imports is larger.

Keywords: Household borrowing; Trade balance; Dynamic effects; Panel ARDL; Panel VECM; E21; F32; G21 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Does Household Borrowing Reduce the Trade Balance? Evidence from Developing and Developed Countries (2021)
Working Paper: Does household borrowing reduce the trade balance? Evidence from developing and developed countries (2021)
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DOI: 10.1007/s11079-023-09713-w

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