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- Title
Zombies at Large? Corporate Debt Overhang and the Macroeconomy.
- Authors
Jordà, Òscar; Kornejew, Martin; Schularick, Moritz; Taylor, Alan M
- Abstract
Debt overhang is associated with higher financial fragility and slower recovery from recession. However, while household credit booms have been extensively documented to have this property, we find that corporate debt does not fit the same pattern. Newly collected data on nonfinancial business liabilities for 18 advanced economies over the past 150 years shows that, in the aggregate, greater frictions in corporate debt resolution make for slower recoveries, with weak investment and more persistent "zombie firms" and that this is an important factor in explaining the difference in outcomes relative to household credit booms.
- Subjects
CORPORATE debt; MACROECONOMICS; RECESSIONS; ECONOMIC recovery; HOUSEHOLDS &; economics; CONSUMER credit; COVID-19 pandemic; GLOBAL Financial Crisis, 2008-2009
- Publication
Review of Financial Studies, 2022, Vol 35, Issue 10, p4561
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hhac018