The Impact of Household Debt on Economic Growth via Consumption

Evidence from South Korea and China

Bibliographic Data

ID19229587
AuthorsKyuyeon Hwang (0009-0000-1604-7995, Korea Institute for Industrial Economics and Trade), Joohyeong Lee (0000-0001-7233-6409, Yonsei University, corresponding author)
Year2026
Volume61
Issue6
Pages4974-4996
Publication date2026-05-02
Open AccessYes
TypeARTICLE
VenueJournal of Asian and African Studies (JOURNAL)
Journal identifiersISSN: 0021-9096 • E-ISSN: 1745-2538
PublisherSAGE Publications (PUBLISHER • US)
DOI10.1177/00219096261437668
OpenAlexW7160304239
LanguageEN
References cited34

Household debt acts as a double-edged sword, exerting heterogeneous effects on economic growth. Using quarterly data for South Korea (2007–2024) and China (2007–2023), this study examines short- and long-run impacts through ordinary least squares (OLS), generalized method of moments (GMM), and two-stage least squares (2SLS) estimations with a mediation framework. For South Korea, GMM results show short-run growth effects of 0.077 and long-run effects of −0.055, while 2SLS estimates are 0.059 and −0.046. For China, short-run effects are 0.069 (GMM) and 0.168 (2SLS), with long-run effects of −0.133 and −0.096. Consumption-mediated effects further amplify this asymmetry, indicating that debt-driven demand supports short-term growth but constrains long-term performance

China · Consumption (sociology) · Debt · Generalized least squares · Generalized method of moments · Household debt · Least-squares function approximation · Mediation · Ordinary least squares · Financial Literacy, Pension, Retirement Analysis · Fiscal Policies and Political Economy · Monetary Policy and Economic Impact

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