Does Household Borrowing Reduce the Trade Balance? Evidence from Developing and Developed Countries
CESifo, Munich, 2021
CESifo Working Paper No. 9123
We examine the dynamic impact of household borrowing on the trade balance using data from 33 developing countries and 36 developed countries over the 1980-2017 period. Our findings suggest that the impact of household borrowing on the trade balance is by and large negative, both in the short and long run. We show that household borrowing’s adverse effects on the trade balance are more pronounced but less persistent in developing countries.
Monetary Policy and International Finance
Trade Policy