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Does household borrowing reduce the trade balance? Evidence from developing and developed countries

Author

Listed:
  • Can Xu

    (University of Groningen)

  • Jan Jacobs

    (University of Groningen, CAMA and CIRANO)

  • Jakob

    (University of Groningen and CESifo, Munich)

Abstract

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.

Suggested Citation

  • Can Xu & Jan Jacobs & Jakob, 2021. "Does household borrowing reduce the trade balance? Evidence from developing and developed countries," GRU Working Paper Series GRU_2021_019, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    • Handle: RePEc:cth:wpaper:gru_2021_019
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    More about this item

    Keywords

    household borrowing; trade balance; dynamic effects; panel ARDL model;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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