Debt deflation: theory and evidence.
Part of a special issue presenting the papers and proceedings of the Eighth Annual Congress of the European Economic Association. In his address to the congress, the president of the association assesses the relevance of debt deflation to aggregate economic fluctuations. He presents three “stylise...
| Publicado en: | European Economic Review Vol. 38; pp. 419 - 446 |
|---|---|
| Autor principal: | |
| Formato: | Artículo |
| Publicado: |
Elsevier Science
April 1994
|
| Materias: | |
| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | Part of a special issue presenting the papers and proceedings of the Eighth Annual Congress of the European Economic Association. In his address to the congress, the president of the association assesses the relevance of debt deflation to aggregate economic fluctuations. He presents three “stylised facts” with regard to debt and its effect on consumption growth in the 1930s and the 1990s and discusses the reception of Irving Fischer's work on debt deflation by Fischer's contemporaries. He argues that it is useful to consider debt deflation as a real business cycle phenomenon. In addition, he provides a theoretical discussion of the reaction of debt and consumption to shocks in the context of a model of precautionary saving that has as its basis the role of distributional shocks, which implies that aggregate demand may be a nonmonotonic function of the price of assets in terms of the consumption good. |
|---|