Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/232007
Authors: 
Du Caju, Philip
Périlleux, Guillaume
Rycx, François
Tojerow, Ilan
Year of Publication: 
2021
Series/Report no.: 
GLO Discussion Paper No. 799
Abstract: 
This paper investigates the potentially non-linear relation between households' indebtedness and their consumption between 2010 and 2014 in Belgium, using panel data from the two waves of the Household Finance and Consumption Survey. Unlike previous studies, we find a negative effect of households' indebtedness on their consumption, even in the absence of negative shock on their assets. Our findings suggest that, without such a shock, it is the day-to-day sustainability of the debt, rather than its overall sustainability, that leads households to reduce their consumption. We perform as well a threshold analysis, whose results suggest that households should not have a debt-service-to-income ratio greater than 30%. The effect appears to be robust to various specifications, to result from a trade-off between housing and consumption, and to be more prevalent among more fragile households.
Subjects: 
Households
Indebtedness
Consumption
Debt-Service-to-Income
Non-linear Heterogeneous Effects
JEL: 
D12
D14
E21
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.