The Impact of Price on Household Debt in Developing Countries
DOI:
https://doi.org/10.22452/IJIE.vol18no1.10Keywords:
Household debt, Prices, ARDL, Developing countries, Social classAbstract
Present economic uncertainty has led to higher prices, especially for essential
goods, and increasing inflation rates, which suggests that households may have lower
purchasing power. This has led to greater reliance on credit to cover rising living
costs, especially for low-income social classes. Hence, this study examines how prices
affect household debt in ten developing countries using the autoregressive distributed
lags (ARDL) model. The results show that prices and sub-indicators significantly and
positively influence debt for the low-income-wealth social class. Therefore, this study
proposes targeted support and market competition as key policy strategies. First, it
argues for targeted subsidies, facilitated by a comprehensive database, to identify and
support the most affected low-income individuals, which will improve subsidy efficiency
and government monitoring. Second, the study recommends promoting competition and
strengthening market oversight in critical sectors to reduce costs and expand consumer
options.
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