BIS authors identify tipping point in household debt impact
Researchers trace the effects of household debt on the real economy
Rising household debt can provide a boost to growth in the short run, but the long-term effect is negative and there are thresholds beyond which the effect worsens, researchers have found.
Marco Lombardi, Madhusudan Mohanty and Ilhyock Shim say the long-run effect of household debt on consumption worsens when the debt-to-GDP ratio hits 60%. The impact on growth worsens at a somewhat higher ratio – 80%. They present their findings in a working paper published by the Bank for International
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