Household Debt and Country Economic Growth: Does a Magic Threshold Exist?

  • Siti Nurazira Mohd Daud Universiti Utara Malaysia
  • Jan M Podivinsky University of Southampton
  • Khairunnisa Abd Samad Universiti Teknologi MARA Melaka
Keywords: household debt, economic growth, threshold, tipping-point, developed and developing countries, crisis


Average household debt has now surpassed the level of 2008, which signals an increase in systemic risk and thereby the fragility of the financial system. This paper investigates the effect of household debt on 24 countries’ economic growth. In addition, we also examine whether a tipping point of debt exists. By employing the threshold method, we found that the impact of household debt on a country’s economic growth is negative. Because the relationship between debt and growth is a monotonically non-increasing function, we do not find a magic threshold of debt.


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How to Cite
Siti Nurazira Mohd Daud, Jan M Podivinsky, & Khairunnisa Abd Samad. (2021). Household Debt and Country Economic Growth: Does a Magic Threshold Exist?. International Journal of Business and Society, 22(1), 161-174.