Household Debt and Its Implications for Monetary Policy Channels: Risk or Another Credit Growth Opportunity

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F61989100%3A27510%2F22%3A10250761" target="_blank" >RIV/61989100:27510/22:10250761 - isvavai.cz</a>
Result on the web
<a href="https://www.slu.cz/opf/cz/file/cul/9299fa9b-bdca-4e74-a5e7-956077b9df49" target="_blank" >https://www.slu.cz/opf/cz/file/cul/9299fa9b-bdca-4e74-a5e7-956077b9df49</a>
DOI - Digital Object Identifier
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Result language
angličtina
Original language name
Household Debt and Its Implications for Monetary Policy Channels: Risk or Another Credit Growth Opportunity
Original language description
The macroeconomic environment in the Czech Republic is characterized by a low level of household debt,which has been growing strongly over the past decade. Household debt can alter the functioning of monetarypolicy channels and it is essential to study these effects. I construct a Bayesian SRVAR model and then interpretit using response function analysis for the period from 2000 to 2021 and examine the impact of monetary policyshock on economic environment in the Czech Republic at low and high debt levels. After a monetaryrestriction, there is a decline in output, price level, and household debt. Relatively lower and relatively highhousehold indebtedness does not significantly shift the channel of monetary policy transmission. Resultssuggest dampening effects of the lender effect on the cash flow channel. Evaluating the high-debt and low-debtmodels, I find that when households are relatively more indebted, debt-to-GDP does not respond to themonetary restriction, and the decline in debt does not occur as in the case of relatively low debt. Conventionalmonetary policy and interest rate normalization contribute positively to financial stability. Borrowing ofhousehold sector cools down after monetary restriction shock.
Czech name
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Czech description
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Publication year
2022
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection
Proceedings of International Scientific Conference Economic and Societal Challenges of the European Economy : 13.-15.9.2022, Petrovice u Karviné
ISBN
978-80-7510-527-1
ISSN
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e-ISSN
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Number of pages
12
Pages from-to
77-90
Publisher name
Slezská univerzita v Opavě
Place of publication
Opava
Event location
Petrovice u Karviné
Event date
Sep 13, 2022
Type of event by nationality
EUR - Evropská akce
UT code for WoS article
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