The Swedish households’ debt relative to income has increased for some time now, with the Riksbanks’ executive board expressing its concern for the risk it brings. It has been debated whether or not to take the high indebtedness into account when setting the policy rate. There is at the same time no consensus about the relationship between the repo rate and household debt. This study aims to examine the effect of a change in the repo rate on household debt-to-income ratio, using a VAR-model. The result is that a 1 percentage point shock to the repo rate for one quarter will have a negative impact on the household debt-to-income ratio by 1.75 percentage points after about 8 quarters. However this may not decrease the risk associated with the debt due to higher unemployment.

This thesis investigates the impact that changing age demographics have on household debt-to-income ratios across 16 European countries using fixed effect panel data regression analysis. This study is conducted for the period between 2000 and 2021, and investigates how different age groups contribute to variations in household debt-to-income ratios, based on the life cycle hypothesis. Major findings point to a negative relationship in regards to the presence of older population, particularly older workers in the labor force, on debt-to-income ratios. On the other hand, the young adults, majorly those aged 30-39 years, present a correlation that is positive. The paper gives insight into how changing age structures may impact household debt at the macro level, offering considerations for policymakers.