Swedish household debt is not too high: Look at solvency and liquidity, not debt to income
cepr.org/voxeu/column...
The household debt-to-income ratio (the light-blue line) looks less threatening in the bottom figure, when compared with the household assets-to-income and net wealth-to-income ratio.
13.11.2025 14:27 — 👍 0 🔁 0 💬 0 📌 0
Graph of Swedish household debt-to-income ratio as a percent with the high-risk thresholds of the European Commission and ESRB noted.
The Swedish authorities and international organisations often claim that household debt poses a threat to financial and macroeconomic stability, with reference to a high debt-to-income ratio. This column argues that the debt-to-income ratio is a poor predictor of future crises, and that one should look at aggregate and individual data on household solvency (debt relative to assets) and liquidity (debt-service relative to debt-service capacity) instead. Because solvency and liquidity levels are good, Swedish household debt is not a threat to financial and macroeconomic stability.
@leosven.bsky.social argues that the debt-to-income ratio is a poor predictor of future crises, and that one should look at aggregate and individual data on household solvency and liquidity instead.
cepr.org/voxeu/column...
#EconSky
12.11.2025 08:54 — 👍 6 🔁 4 💬 1 📌 0
New paper: "Is Swedish Household Debt Too High?"
larseosvensson.se/2024/11/01/i...
03.11.2024 12:36 — 👍 3 🔁 0 💬 0 📌 0
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