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The nub of the household indebtedness, and its association to the housing market, from a Swedish point of view

Bacanovic, Anita LU and Abazi, Doresa (2020) NEKH01 20201
Department of Economics
Abstract
The debt to disposable income ratio of Swedish households has the past thirty years increased radically and mortgages cover eighty percent of household’s financial liabilities. According to the Life-cycle hypothesis, households maintain a steady consumption throughout their lifetime by accumulating mortgages in early ages with the aim to repay their debts when their economy becomes stronger as they become older. This paper aims to investigate what factors drive Swedish households to borrow and increase their debts and debt ratios, and whether the main impact on household debts is the house prices that have increased radically as well.
This is done by estimating several econometric regressions and analysing variables such as; housing... (More)
The debt to disposable income ratio of Swedish households has the past thirty years increased radically and mortgages cover eighty percent of household’s financial liabilities. According to the Life-cycle hypothesis, households maintain a steady consumption throughout their lifetime by accumulating mortgages in early ages with the aim to repay their debts when their economy becomes stronger as they become older. This paper aims to investigate what factors drive Swedish households to borrow and increase their debts and debt ratios, and whether the main impact on household debts is the house prices that have increased radically as well.
This is done by estimating several econometric regressions and analysing variables such as; housing price index (HPI), interest rate (IR), debt to assets (DA), and squared mean age (AGE2) to see how the variables affect the dependent variable - debt to disposable income (DDI). The results show that housing prices have a strong positive impact on the dependent variable in the long-run. In fact, all variables are significant in the long-run except for interest rate (IR) which is a short-run coefficient. Thus, affecting household debt and the housing market in the short-run. (Less)
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author
Bacanovic, Anita LU and Abazi, Doresa
supervisor
organization
alternative title
An empirical investigation of the household indebtedness with a focus on the housing market
course
NEKH01 20201
year
type
M2 - Bachelor Degree
subject
keywords
Household debt, housing price, interest rate, debt to disposable income, debt to assets, demographics, debt ratio
language
English
id
9032333
date added to LUP
2021-01-19 15:21:05
date last changed
2021-01-19 15:21:05
@misc{9032333,
  abstract     = {{The debt to disposable income ratio of Swedish households has the past thirty years increased radically and mortgages cover eighty percent of household’s financial liabilities. According to the Life-cycle hypothesis, households maintain a steady consumption throughout their lifetime by accumulating mortgages in early ages with the aim to repay their debts when their economy becomes stronger as they become older. This paper aims to investigate what factors drive Swedish households to borrow and increase their debts and debt ratios, and whether the main impact on household debts is the house prices that have increased radically as well. 
This is done by estimating several econometric regressions and analysing variables such as; housing price index (HPI), interest rate (IR), debt to assets (DA), and squared mean age (AGE2) to see how the variables affect the dependent variable - debt to disposable income (DDI). The results show that housing prices have a strong positive impact on the dependent variable in the long-run. In fact, all variables are significant in the long-run except for interest rate (IR) which is a short-run coefficient. Thus, affecting household debt and the housing market in the short-run.}},
  author       = {{Bacanovic, Anita and Abazi, Doresa}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The nub of the household indebtedness, and its association to the housing market, from a Swedish point of view}},
  year         = {{2020}},
}