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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

No GRU_2021_019, GRU Working Paper Series from City University of Hong Kong, Department of Economics and Finance, Global Research Unit

Abstract: We examine the dynamic impact of household borrowing on the trade balance using data from 33 developing countries and 36 developed countries over the 1980-2017 period. Our findings suggest that the impact of household borrowing on the trade balance is by and large negative, both in the short and long run. We show that household borrowing’s adverse effects on the trade balance are more pronounced but less persistent in developing countries.

Keywords: household borrowing; trade balance; dynamic effects; panel ARDL model (search for similar items in EconPapers)
JEL-codes: E21 F32 G21 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021-05-21
New Economics Papers: this item is included in nep-mac
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