Open AccessDeterminants of Household Debt in Botswana: 1994-2012
Author(s) -
Faith M. Zimunya,
Mpho Raboloko
Publication year - 2015
Publication title -
journal of economics and public finance
Language(s) - English
Resource type - Journals
eISSN - 2377-1046
pISSN - 2377-1038
DOI - 10.22158/jepf.v1n1p14
Subject(s) - household debt , economics , debt , error correction model , inflation (cosmology) , monetary economics , per capita , money supply , interest rate , macroeconomics , econometrics , population , demography , cointegration , physics , sociology , theoretical physics
The paper identifies the factors that are influential in determining the growth of household debt in Botswana. Understanding the relationship between household debt and other economic indicators is an important step towards formulating focused and effective policies that control the effects of household debt on the whole economy. Using quarterly data from the first quarter of 1994 to the second quarter of 2012,the paper employs the Vector Error Correction Model (VECM) to analyse the influence of G ross D omestic P roduct (GDP) per capita, interest rates, inflation, household consumption and money supply on household debt. The findings indicate that GDP per capita, interest rates and money supply determine changes in household debt in the long-run. Further analysis shows that lagged household debt, interest rates and money supply influence changes in household debt in the short-run.