Publication detail

Household Balance Sheets and Economic Crisis

Author(s): doc. PhDr. Ing. Ing. Petr Jakubík Ph.D. Ph.D.,
Type: IES Working Papers
Year: 2011
Number: 20
Published in: IES Working Papers 20/2011
Publishing place: Prague
Keywords: credit cycle, households’ distress, insolvency, household default, aggregate consumption
JEL codes: G28, G32, G33, G38
Suggested Citation: Jakubík, P. (2011). “Household Balance Sheets and Economic Crisis” IES Working Paper 20/2011. IES FSV. Charles University.
Grants: GACR 403/10/1235 (2010-2014) Institutional Responses to Financial Market Failures GAUK 2009/47509 Decomposition of securities' market prices into risk parameters IES Research Framework Institutional task (2005-2011) Integration of the Czech economy into European union and its development
Abstract: This paper studies the economic impact of the current global economic downturn on the household sector. Household budgets can be negatively affected by declines in nominal wages and increases in unemployment. We empirically test this effect for the small open emerging economy. As a result of a lack of individual data on household finances, micro data are simulated. Our analysis clearly shows that there is a significant additional decline in consumption related to an increase in household default rates and unemployment. We find that potential household insolvencies have important implications for the financial system as well as for the macroeconomy.
Downloadable: WP 2011_20_Jakubik


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