Has the Rise in Debt Made Households More Vulnerable?

This paper reviews, for a number of OECD economies, macroeconomic developments in household balance sheets over the past two decades. The main findings show that the rise in household debt to historical levels has been driven by a combination of favourable financial conditions and buoyant housing ma...

Full description

Bibliographic Details
Main Author: Girouard, Nathalie
Other Authors: Kennedy, Mike, André, Christophe
Format: eBook
Language:English
Published: Paris OECD Publishing 2006
Series:OECD Economics Department Working Papers
Subjects:
Online Access:
Collection: OECD Books and Papers - Collection details see MPG.ReNa
LEADER 02602nma a2200277 u 4500
001 EB001828063
003 EBX01000000000000000994509
005 00000000000000.0
007 cr|||||||||||||||||||||
008 180616 ||| eng
100 1 |a Girouard, Nathalie 
245 0 0 |a Has the Rise in Debt Made Households More Vulnerable?  |h Elektronische Ressource  |c Nathalie, Girouard, Mike, Kennedy and Christophe, André 
246 2 1 |a Les ménages sont-ils plus vulnérables du fait de leur endettement croissant? / Nathalie, Girouard, Mike, Kennedy et Christophe, André 
246 3 1 |a Les ménages sont-ils plus vulnérables du fait de leur endettement croissant? 
260 |a Paris  |b OECD Publishing  |c 2006 
300 |a 39 p.  |c 21 x 29.7cm 
653 |a Economics 
700 1 |a Kennedy, Mike 
700 1 |a André, Christophe 
041 0 7 |a eng  |2 ISO 639-2 
989 |b OECD  |a OECD Books and Papers 
490 0 |a OECD Economics Department Working Papers 
024 8 |a /10.1787/352035704305 
856 4 0 |a oecd-ilibrary.org  |u https://doi.org/10.1787/352035704305  |x Verlag  |3 Volltext 
082 0 |a 330 
520 |a This paper reviews, for a number of OECD economies, macroeconomic developments in household balance sheets over the past two decades. The main findings show that the rise in household debt to historical levels has been driven by a combination of favourable financial conditions and buoyant housing markets. There have also been a number of supply-side innovations in credit markets that have eased the access to credit for lower income borrowers and reduced financial constraints for first-time homebuyers. Total household net wealth has risen and provided households with a financial cushion against a negative shock. That said, households in a number of countries have leveraged balance sheets and the sensitivity to house price and interest rate developments has likely increased. The paper then examines micro level information which suggests that most of the debt is held by households better able to manage it. In particular, the major part of debt is held by higher-income households, who also spend a smaller proportion of their disposable income servicing debts. Lower-income households, with less ability to service debt, do not hold that much and, as such, the spill over effects from this group to the rest of the economy are perhaps not large. Whether the situation remains benign or not is discussed in the final section of the paper. Estimates presented point to significant effects of changes in net wealth on household saving rates in a large number of the countries studied