Publication

This paper looks at the implications of household liabilities and debts in the run up to the economic debt crisis. The author draws theoretical lessons from the household debt cycle and considers the causes of the rapid growth. He also explains that, major demand for household credit products generated an increase in household debt, which contributed to growth rates during the pre-crisis period, but became household-debt overhangs in some cases. Although not at the core of the crisis, household debt had important consequences for macroeconomic stability, robustness of growth and the depth of recessions.