Jurnal Ekonomi dan Pembangunan Vol. 30 No. 2 Tahun 2022
THE CONSUMPTION EFFECT OF HOUSEHOLD DEBT: EVIDENCE FROM INDONESIA

Jurnal Ekonomi dan Pembangunan Vol. 30 No. 2 Tahun 2022
THE CONSUMPTION EFFECT OF HOUSEHOLD DEBT: EVIDENCE FROM INDONESIA

consumption growth, household debt, autoregressive distributed lag, cointegration relationship
JEL Classification: C22, D12, E21

This paper empirically examines the relationship between household debt and household consumption growth
in Indonesia using the ARDL model. This paper employs quarterly time series data on Indonesian household
consumption expenditures and household debt from 2002 to 2017. The results of regression analysis showed negative
relationships between household debt and consumption growth in the long run, while positive linkage was found
in the short run. Specifically, in the long run, a 10 percentage points increase in household debt was associated
with decreasing household consumption growth by 6 percent. In contrast, in the short-run, a 10 percent increase
in household debt was associated with increasing consumption growth by 29 percentage points. Thus, although
the effect of household debt on consumption growth is positive in the short term, it is negative in the long term.
Interestingly, the positive effect is seen to decrease when the ratio of household debt to GDP is above 12.2 percent.

Pihri Buhaerah

https://jurnalekonomi.lipi.go.id/JEP

2022

peri irawan

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indonesia

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