Is Swedish Household Debt Too High? Solvency, Liquidity, and Debt-Financed Overconsumption

Swedish authorities and international organizations that comment on Swedish economic policy have argued that household debt is too high and a threat to financial and macroeconomic stability (FMS). But household debt may become a threat to FMS under essentially three conditions: (1) Household debt becomes too high relative to household assets. (2) Households' debt service becomes too high relative to incomes and payment capacity. (3) Households use home-equity withdrawals--made possible by rising house prices--to finance an unsustainable overconsumption of macroeconomic significance