Household debt and the macroeconomy

BIS Quarterly Review  | 
08 March 2004
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 |  14 pages

Lower interest rates and an easing of liquidity constraints have led to a substantial rise in household debt over the past two decades. The greater indebtedness has made the household sector more sensitive to changes in interest rates, income and asset prices. This enhanced sensitivity is higher where more households have variable instead of fixed rate mortgages.

JEL classification: E210, E520.