Household Indebtedness in the European Union Countries: Going Beyond the Mainstream Interpretation
This paper develops a panel data econometric analysis in order to determine the main macroeconomic causes of household indebtedness in the European Union countries from 1995 to 2019. During that time, household indebtedness reached unprecedented and unsustainable levels, which played a crucial role...
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| Format: | Article |
| Language: | English |
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Associazione Economia civile
2023-05-01
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| Series: | PSL Quarterly Review |
| Subjects: | |
| Online Access: | https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/17894 |
| _version_ | 1797821678128988160 |
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| author | Ricardo Barradas Inês Tomás |
| author_facet | Ricardo Barradas Inês Tomás |
| author_sort | Ricardo Barradas |
| collection | DOAJ |
| description | This paper develops a panel data econometric analysis in order to determine the main macroeconomic causes of household indebtedness in the European Union countries from 1995 to 2019. During that time, household indebtedness reached unprecedented and unsustainable levels, which played a crucial role in the emergence of the last financial and economic crisis. This is not clearly well interpreted by the mainstream economics, which advocates that household indebtedness is just an instrument to smooth consumption in a continuous process of utility maximization over life. This paper estimates a model according to which the household indebtedness depends on seven mainstream and non-mainstream macroeconomic causes, namely housing prices, financial asset prices, personal income inequality, the households’ labour income, welfare state expenditures, the working-age population and interest rates. This paper finds that housing prices, welfare state expenditures and interest rates impact positively on household indebtedness in the European Union countries, whilst the financial asset prices, personal income inequality and households’ labour income impact negatively on household indebtedness in the European Union countries. This paper also finds that the fall of household labour income and the rise of the housing prices have been the main triggers of household indebtedness in the European Union countries since 1995.
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| format | Article |
| id | doaj.art-1de3c5f90bfd47f8ac100ee7e591ab85 |
| institution | Directory Open Access Journal |
| issn | 2037-3635 2037-3643 |
| language | English |
| last_indexed | 2024-03-13T09:56:20Z |
| publishDate | 2023-05-01 |
| publisher | Associazione Economia civile |
| record_format | Article |
| series | PSL Quarterly Review |
| spelling | doaj.art-1de3c5f90bfd47f8ac100ee7e591ab852023-05-23T17:21:30ZengAssociazione Economia civilePSL Quarterly Review2037-36352037-36432023-05-017630410.13133/2037-3643/17894Household Indebtedness in the European Union Countries: Going Beyond the Mainstream InterpretationRicardo Barradas0Inês TomásIscte - Instituto Universitário de Lisboa, Dinâmia’CET - Iscte, Lisboa, PortugalThis paper develops a panel data econometric analysis in order to determine the main macroeconomic causes of household indebtedness in the European Union countries from 1995 to 2019. During that time, household indebtedness reached unprecedented and unsustainable levels, which played a crucial role in the emergence of the last financial and economic crisis. This is not clearly well interpreted by the mainstream economics, which advocates that household indebtedness is just an instrument to smooth consumption in a continuous process of utility maximization over life. This paper estimates a model according to which the household indebtedness depends on seven mainstream and non-mainstream macroeconomic causes, namely housing prices, financial asset prices, personal income inequality, the households’ labour income, welfare state expenditures, the working-age population and interest rates. This paper finds that housing prices, welfare state expenditures and interest rates impact positively on household indebtedness in the European Union countries, whilst the financial asset prices, personal income inequality and households’ labour income impact negatively on household indebtedness in the European Union countries. This paper also finds that the fall of household labour income and the rise of the housing prices have been the main triggers of household indebtedness in the European Union countries since 1995. https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/17894European Unionhousehold indebtednesspanel datafixed effect two-stage least squares |
| spellingShingle | Ricardo Barradas Inês Tomás Household Indebtedness in the European Union Countries: Going Beyond the Mainstream Interpretation PSL Quarterly Review European Union household indebtedness panel data fixed effect two-stage least squares |
| title | Household Indebtedness in the European Union Countries: Going Beyond the Mainstream Interpretation |
| title_full | Household Indebtedness in the European Union Countries: Going Beyond the Mainstream Interpretation |
| title_fullStr | Household Indebtedness in the European Union Countries: Going Beyond the Mainstream Interpretation |
| title_full_unstemmed | Household Indebtedness in the European Union Countries: Going Beyond the Mainstream Interpretation |
| title_short | Household Indebtedness in the European Union Countries: Going Beyond the Mainstream Interpretation |
| title_sort | household indebtedness in the european union countries going beyond the mainstream interpretation |
| topic | European Union household indebtedness panel data fixed effect two-stage least squares |
| url | https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/17894 |
| work_keys_str_mv | AT ricardobarradas householdindebtednessintheeuropeanunioncountriesgoingbeyondthemainstreaminterpretation AT inestomas householdindebtednessintheeuropeanunioncountriesgoingbeyondthemainstreaminterpretation |