Australian Household Debt: A Sectoral-Level Study

A phenomenon in recent decades has been the rapid growth of household debt in developed countries. Australia is a good example of this. In this paper dynamic ordinary least squares (DOLS) using quarterly time series data is employed to explore the determinants of, and their influence on, Australian household debt. The estimated model indicates that, at the household sectoral level, housing assets and household non-equity financial assets are dominant factors affecting Australian household debt. The effects of household income and consumption on household debt were found to be insignificant. The new tax system introduced in 1999, however, may contribute positively to rising household debt.