Household Debt, Corporate Debt, and the Real Economy: Some Empirical Evidence

Donghyun Park, Kwanho Shin, Shu Tian

Research output: Contribution to journalArticlepeer-review


The rapid accumulation of private debt is widely viewed as a major risk to financial and economic stability. This article systematically and comprehensively assesses the effect of private debt buildup on economic growth. In the spirit of the existing study that separately examines the effects of two types of private debt–household debt and corporate debt–on growth in advanced economies, we specifically provide new evidence on the growth-private debt nexus in both advanced and emerging market economies (EMEs). Moreover, we construct financial peaks in terms of the speed of debt accumulation rather than crisis dates and find that in both advanced and EMEs, corporate debt buildups cause more financial peaks than household debt buildups. Furthermore, corporate debt-induced financial recessions inflict a bigger damage on output than household debt-induced financial recessions in EMEs. Overall, our evidence suggests that policymakers would do well to closely monitor not only household debt but also corporate debt.

Original languageEnglish
Pages (from-to)1474-1490
Number of pages17
JournalEmerging Markets Finance and Trade
Issue number5
Publication statusPublished - 2022


  • E32
  • E44
  • G01
  • Private debt
  • business cycle
  • corporate debt
  • crisis
  • economic growth
  • household debt
  • output

ASJC Scopus subject areas

  • Finance
  • Economics, Econometrics and Finance(all)


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