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IRP Report The impacts of individuals and markets on household debt in Australia Name: Yubo Feng ID: a1730086 Class: PEP 11 Teachers: Catharine Orr & Eva Vekas Date: 23/6/17
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YUBO FENG a1730086 PEP 11 23/6/17 Contents List of Illustration……………………………………………………… ...................................................................... i Abstract ……………………………………………………………………………………………………………………………………….ii 1.Introduction ................................................................................................................................. 5 2.Findings ....................................................................................................................................... 6 2.1 Individual impacts on household debt in Australia ................................................................ 6 2.1.1 Excessive Consumption .................................................................................................. 6 2.1.2 Unemployment .............................................................................................................. 7 2.2 Marketable impacts on household debt in Australia ............................................................. 7 2.2.1 Interest rate ................................................................................................................... 7 2.2.2 Financial Deregulation ................................................................................................... 8 3.Discussion .................................................................................................................................... 9 4.Conclusion ................................................................................................................................. 10 5.References ................................................................................................................................. 11 6.Bibliography ............................................................................................................................... 12 2
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YUBO FENG a1730086 PEP 11 23/6/17 List of Illustration Figure 1 The increase of household debt in Australia 1990-2009 Table 1 Expected signs of coefficients 3
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YUBO FENG a1730086 PEP 11 23/6/17 Abstract The increase of household debt has become a global phenomenon during the last twenty years and occurred in Australian simultaneously. Previous studies reveal that although the increase of household debt in Australia is decelerating after the Global Financial Crisis, it is essential to pay more attention to control household debt in Australia due to the lesson of the sub-prime crisis in the United States. This report aims to discuss two key components which impact Australian household debt significantly: individual components and marketable components. It is shown that household debt in Australia may be impacted by complicated factors in both individual and market levels. To some extent, the growth of household debt may result from individual factors, such as excessive consumption and unemployment. In addition, there is a more tight relevance between household debt and marketable factors. Finally, suggestions are given to find out feasible solutions to avert the risk of over control of Australian household debt. 4
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YUBO FENG a1730086 PEP 11 23/6/17 1. Introduction There was a rapid increase in household debt that occurred in Australian during the past few years, according to Figure 1 between 1990 and 2009 (Green, Harper & Smirl 2009, p.340; Reserve Bank of Australia 2010). Although an abundance of studies indicated that the increase of household debt in Australia was decelerating after the Global Financial Crisis, it is essential to investigate the components which influence the Australian household debt due to the caution of the sub-prime crisis in the United States (Meng, Hoang & Siriwardana 2013, p.81). This report aims to discuss two universal components which impact Australian household debt: individual components and market components. The report only concentrates on excessive consumption and unemployment in individual components and interest rates and financial deregulation in marketable components. Ultimately, there is a discussion which is used to find out appropriate solutions to mitigate the risk of over control of household debt.
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  • Three '17
  • Elisabeth Hutton

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