Title: An investigation of the macroeconomic determinants of household debt in Lesotho: evidence from principal components and the ARDL approach

Authors: Moeti Damane

Addresses: Research Department, Central Bank of Lesotho, P.O. Box 1184, Maseru 100, Lesotho

Abstract: This paper employs the autoregressive distributed lag model, principal component analysis and annual time series data from 1980 to 2016 to investigate the relationship between household debt, gross domestic product, household consumption, consumer price index, lending rate, and unemployment rate in Lesotho. Results reveal existence of a long-run cointegrating relationship between household debt and other macrovariables. There is proof of the life cycle hypothesis in Lesotho. Authorities are encouraged to rein in household debt, especially during economic booms through proper regulation of lending and borrowing practices while also exploring measures to curtail joblessness.

Keywords: Lesotho; household debt; economic growth; principal component analysis; PCA; error correction.

DOI: 10.1504/IJEPEE.2023.131036

International Journal of Economic Policy in Emerging Economies, 2023 Vol.17 No.3, pp.283 - 306

Received: 16 Oct 2019
Accepted: 07 May 2020
Published online: 22 May 2023 *

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