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An investigation of the macroeconomic determinants of household debt in Lesotho: evidence from principal components and the ARDL approach

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  • Moeti Damane

Abstract

This paper employs the autoregressive distributed lag model, principal component analysis and annual time series data from 1980 to 2016 to investigate the relationship between household debt, gross domestic product, household consumption, consumer price index, lending rate, and unemployment rate in Lesotho. Results reveal existence of a long-run cointegrating relationship between household debt and other macrovariables. There is proof of the life cycle hypothesis in Lesotho. Authorities are encouraged to rein in household debt, especially during economic booms through proper regulation of lending and borrowing practices while also exploring measures to curtail joblessness.

Suggested Citation

  • Moeti Damane, 2023. "An investigation of the macroeconomic determinants of household debt in Lesotho: evidence from principal components and the ARDL approach," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 17(3), pages 283-306.
    • Handle: RePEc:ids:ijepee:v:17:y:2023:i:3:p:283-306
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