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    Slow recoveries: any role for corporate leverage?

    Smets, F. and Villa, Stefania (2016) Slow recoveries: any role for corporate leverage? Working Paper. Birkbeck, University of London, London, UK.

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    This paper examines whether financial conditions of the non-financial corporate sector can ex- plain why the recovery from recessions in the United States is slower since the mid-1980s. Lever- age by the corporate sector has increased significantly since the financial deregulation of the mid-1980s. Empirical evidence shows that slow recoveries are associated with a significant drop in the growth rates of investment and bank loans, and with a surge in the growth rates of cor- porate bonds. In an estimated dynamic stochastic general equilibrium model with a financial accelerator, counterfactual experiments based on estimates of two samples 1965-1983 and 1984- 2007 show that the non-financial corporate indebtedness affects only marginally the speed of the recovery in the two samples.


    Item Type: Monograph (Working Paper)
    Additional Information: BCAM 1602; ISSN 1745-8587
    Keyword(s) / Subject(s): speed of recoveries, indebtedness, financial frictions, estimated DSGE model
    School: Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School
    Research Centres and Institutes: Applied Macroeconomics, Birkbeck Centre for
    Depositing User: Administrator
    Date Deposited: 21 Mar 2019 16:18
    Last Modified: 02 Aug 2023 17:49


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