Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/241072 
Year of Publication: 
2020
Series/Report no.: 
MNB Working Papers No. 2020/2
Publisher: 
Magyar Nemzeti Bank, Budapest
Abstract: 
We examine the consequences of a sudden increase in household debt burdens by exploiting variation in exposure to household foreign currency debt during Hungary's late-2008 currency crisis. The revaluation of debt burdens leads to higher default rates and a collapse in spending. These responses lead to a worse local recession, driven by employment losses at non-exporting firms, and negative spillover effects on nearby borrowers without foreign currency debt. The estimates translate into a multiplier on higher debt service of 1.67. The impact of debt revaluation is particularly severe when foreign currency debt is concentrated on household, rather than firm, balance sheets.
Subjects: 
household debt
foreign currency debt
currency crisis
financial crisis
business cycles
JEL: 
E2
E3
G2
F3
D12
Document Type: 
Working Paper

Files in This Item:
File
Size





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