Michal Škára, Ladislava Issever Grochová
This paper investigates the relationship between household debt and GDP at different levels of income inequality, with a particular focus on whether fiscal redistribution can provide additional liquidity to indebted households and thereby support economic activity. While household debt is known to stimulate economic activity in the short run and depress GDP in the medium run, the role of fiscal redistribution in moderating these effects remains underexplored. Using a panel dataset of 36 countries over the period 1980–2023 and employing panel local projection methods, the results reveal a countercyclical role for fiscal redistribution. Interestingly, the adverse impact of household debt on GDP is more pronounced in countries with lower income inequality. In these countries, overall redistribution moderates these effects, especially when debt-service burdens peak. This pattern, together with the stronger effects of overall redistribution, likely reflects structural differences in household indebtedness and the credit-market participation of lowincome households. Overall, these findings underscore the importance of fiscal redistribution as a tool for reducing the macroeconomic costs of leverage, offering new insights into the pursuit of sustainable growth and inequality reduction.
JEL kódy: D14, D31, E21, E62, H24
Klíčová slova: Fiscal redistribution, GDP, household debt, income inequality, local projection.
Vydáno: září 2026
Download: CNB WP No. 13/2026 (pdf, 3 MB)