Kingdom of the Netherlands—Netherlands: Selected Issues Paper

December 5, 2014

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Format: Chicago

Kingdom of the Netherlands—Netherlands: Selected Issues Paper, (USA: International Monetary Fund, 2014) accessed September 20, 2024

Summary

This Selected Issues paper analyzes the housing prices, consumption, and the household debt overhang in the Netherlands. Deflated housing prices that were fueled by robust borrowing often leave in their wake households with heavy debt burden. This “debt overhang” forces households into deleveraging—reducing their level of debt to sustainable levels. When deleveraging is brought about through reduced household consumption, it can contribute to a protracted “balance sheet recession” as appears to be the case in the Netherlands. This paper estimates a simultaneous equations model of the Dutch economy using a three-stage least squares approach. Empirical results are supportive of the hypothesis that housing prices strongly affect private consumption.

Subject: Consumption, Economic sectors, Financial institutions, Housing, Housing prices, Mortgages, National accounts, Prices, Small and medium enterprises

Keywords: Consumption, CR, Europe, Firm, Firm leverage, Firms in construction, Global, House price, Housing, Housing corporation, Housing prices, Housing wealth, ISCR, Loss-making firm, Mortgage, Mortgage borrower, Mortgages, Price, Price decrease, Small and medium enterprises

Publication Details

Pages:

66
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2014/328
Stock No:

1NLDEA2014003
ISBN:

9781498359368
ISSN:

1934-7685

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