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Which debt belongs to the state and which debt belongs to the market? Comparative new evidence several capitalist regimes

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  • İbrahim Özmen

    (Selcuk University)

Abstract

This study discovers the relationship between household/private and state debt using a critical approach and provides robust econometric evidence. While the connections between state and household debt manifest through both symmetrical and asymmetrical mechanisms, these mechanisms also comprise different subcomponents. These differences emerge from the temporal harmonization of debt dynamics. The analysis employs unit root tests, revealing multiple structural breaks, alongside hidden cointegration tests and spectral Granger causality test. The findings indicate a trade-off between household/private and state debt. Based on these insights, this study introduces two novel concepts to distinguish between symmetric and asymmetric relationships: debrolling referring to asymmetric mechanisms, and rerolling describing symmetric mechanisms. These concepts contribute to a broader understanding of debt substitution dynamics and provide a fresh perspective on the interaction between state and household indebtedness.

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  • İbrahim Özmen, 2025. "Which debt belongs to the state and which debt belongs to the market? Comparative new evidence several capitalist regimes," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 72(2), pages 1-34, December.
    • Handle: RePEc:spr:inrvec:v:72:y:2025:i:2:d:10.1007_s12232-025-00493-y
    DOI: 10.1007/s12232-025-00493-y
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    Keywords

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    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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