Swedish Household Debt: Macroeconomic determinants of the household debt-to-income ratio

Sammanfattning: This paper describes how the rise in Swedish households’ debt-to-income ratio (DTIR) over the last 30 years can be explained based on macroeconomic implications. In particular, cointegrating relations are analysed based on a specified vector autoregressive (VAR) model, due to spurious estimations from the general OLS-regression. The results explain both a long run relation as well as a short run. In the long run analysis the increase in DTIR is caused by an increase in house prices and a decrease in consumers’ confidence and unemployment rate. In the short run model, comparatively, only consumers’ confidence is shown to have a significant impact on the DTIR.