Slow Debt, Deep Recessions

• 成果类型: Article
• 署名作者: Jungherr, Joachim; Schott, Immo
• 署名单位: University of Bonn; Universite de Montreal; Universite de Montreal
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20190306
• 发表日期: 2022
• 页码: 224-259
• 关键词: financial frictions; BUSINESS; default; fluctuations

摘要

Business credit lags GDP growth by about one year. This contributes to high leverage during recessions and slow deleveraging. We show that a model in which firms use risky long-term debt replicates this slow adjustment of firm debt. In the model, slow-moving debt has important effects for real activity. High levels of firm debt issued during expansions are only gradually reduced during recessions. This generates an adverse feedback loop between high default rates and low investment and thereby amplifies the downturn. Sluggish deleveraging slows down the recovery.