Stress testing the household sector in Mongolia

Doojav, Gan-Ochir and Bayarjargal, Ariun-Erdene (2017): Stress testing the household sector in Mongolia. Published in: Asia-Pacific Development Journal , Vol. 24, No. 2 (December 2017): pp. 23-52.

Abstract

The present paper contains an outline of a simulation-model for stress-testing the household sector in Mongolia. The model uses data from the Household Socio-Economic Survey to assess the financial resilience of the household sector to macroeconomic shocks. The results suggest that the household sector of Mongolia is vulnerable to shocks associated with interest rates, cost of basic consumption, asset prices and unemployment. In particular, impacts of interest and consumer price shocks on household’s debt at risk (or expected loan losses) are considerable. Furthermore, it is found that a substantial increase in household indebtedness has boosted the financial fragility of the household sector. Those results have important policy implications in mitigating the increasing financial fragility of the household sector and risks to financial stability.

• Item Type: MPRA Paper
• Language: English
• Keywords: Stress testing, household indebtedness, household surveys, Mongolia
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C15 - Statistical Simulation Methods: General; D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Household Saving; Personal Finance; D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E17 - Forecasting and Simulation: Models and Applications

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