IMF Working Papers

Household Deleveraging and Saving Rates: A Cross-Country Analysis

By Romain Bouis

October 29, 2021

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Format: Chicago

Romain Bouis. Household Deleveraging and Saving Rates: A Cross-Country Analysis, (USA: International Monetary Fund, 2021) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Historically high household debt in several economies is calling for a deleveraging, but according to some economists, this adjustment can slow GDP growth by weighing on consumption. Using a sample of advanced and emerging market economies, this paper finds evidence of a negative relationship between changes of household debt-to-income ratios and saving rates. This relationship is however asymmetric, being significant only for debt build-ups. Declining debt ratios and saving are significantly related in some economies, but the relationship is driven by consumer credit, not by mortgages. Results therefore suggest that the economic cost associated with household deleveraging may be overestimated and motivate a deleveraging via lower mortgages.

Subject: Consumer credit, Consumption, Credit, Disposable income, Financial institutions, Money, Mortgages, National accounts

Keywords: Africa, Consumer credit, Consumption, Consumption growth, Credit, Deleveraging, Disposable income, Homeownership rate, Household debt, Housing equity withdrawal., Mortgages, Rates from credit boom, Saving rate, Saving rates

Publication Details

  • Pages:

    49

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2021/257

  • Stock No:

    WPIEA2021257

  • ISBN:

    9781589064072

  • ISSN:

    1018-5941

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