Household Debt and Economic Growth

Abstract

The current study aims to examine the effect of household debt on growth using a sample of 43 countries for the period from 1980 to 2018. The analysis of the resulting panel data employs an a bias-corrected least square dummy variables (LSDVC). The findings for the sample of panel data confirm that the household debt has detrimental effect on growth. The policy makers can propose measures that reinforce suitable macro-prudential policy to enhance the role of household debt on economic growth. Though household debt in reality causes the economic downturn, the findings help the policy maker to control and manage the household debt wisely