Tuesday, June 26, 2007

Household debt and the macroeconomy

Household debt and the macroeconomy
Guy Debelle

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.

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