Every year since 2004, the Bank of England has commissioned NMG Consulting to carry out a survey on household finances. This paper describes the NMG Survey, its methodology, and its advantages and disadvantages relative to other surveys. The NMG Survey is useful in providing a timelier guide to developments in the distribution of household balance sheets than other surveys, it appears better at measuring financial distress, and it includes questions on topical policy issues that are often not available in other surveys. * Submitted July 2015.The views expressed in this paper are those of the authors, and not necessarily those of the Bank of England or its committees. The authors are grateful to Alan Castle, Tom Crossley, Cormac O'Dea, Paul Robinson, Gavin Wallis, Garry Young, an anonymous referee and participants at the March 2015 conference on 'Household Wealth Data and Public Policy' for helpful comments and suggestions. This work contains statistical data from the Office for National Statistics (ONS) which are Crown copyright. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research data sets which may not exactly reproduce National Statistics aggregates.Keywords: household debt, financial distress, wealth, survey methodology. JEL classification numbers: C81, D31. A drawback of the NMG Survey is that there may be a greater risk of selection into the survey based on unobservable characteristics than is the case for some other household surveys. Policy pointsr Understanding developments in households' balance sheets is important for both monetary policy and financial stability.r Aggregate data can provide only a limited assessment of balancesheet positions. There are large differences in financial positions across households, which can affect macroeconomic outcomes.r The Bank of England / NMG Survey is one of a number of publiclyavailable household surveys providing information on balance-sheet positions.r The NMG Survey is timelier than other surveys and it provides a relatively reliable guide to changes in the distribution of balance sheets. It should be viewed as a complement to other surveys that are more comprehensive but less timely.r The NMG Survey also appears better at measuring financial distress than other surveys, and it includes questions on topical policy issues that are often not available in other surveys, such as around how households may respond to higher interest rates.r The main drawback of the NMG Survey is that there is a greater risk that households may be selected into the survey based on unobservable characteristics than is the case in other surveys.

Productivity growth in Italy has been persistently anemic and has lagged that of the euro area over the period 1999-2015, while the indebtedness of its corporate sector has increased. Using the ORBIS firm-level database, this paper studies the long-term impact of persistent corporate-debt accumulation on the productivity growth of Italian firms and investigates whether total factor productivity growth varies with the level of corporate indebtedness. We employ a novel estimation technique proposed by Chudik, Mohaddes, Pesaran, and Raissi (2017) to account for dynamics, bi-directional feedback effects, cross-firm heterogeneity, and cross-sectional dependence arising from unobserved common factors (for example, oil price shocks, labor and product market frictions, and stance of global financial cycle). Filtering out the effects of unobserved common factors and controlling for firmspecific characteristics, we find significant negative effects of persistent corporate debt build-up on total factor productivity growth, and weak evidence of a threshold level of corporate debt, beyond which productivity growth drops off significantly. Our results have strong policy implications, for example the design of the tax system should discourage persistent corporate debt accumulation, and effective and timely frameworks to reduce corporate debt overhangs are essential.

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We show that credit spreads rise after a monetary policy tightening, yet spread reactions are heterogeneous across firms. Exploiting information from a unique panel of corporate bonds matched with balance sheet data for US non-financial firms, we document that firms with high leverage experience a more pronounced increase in credit spreads than firms with low leverage. A large fraction of this increase is due to a component of credit spreads that is in excess of firms' expected default-the excess bond premium. Consistent with the spreads response, we also document that high-leverage firms experience a sharper contraction in debt and investment than low-leverage firms. Our results provide evidence that balance sheet effects are crucial for understanding the transmission mechanism of monetary policy.

This paper shows that lending relationships insulate corporate investment from shocks to collateral values. We construct a novel database covering the banking relationships of UK firms, as well as those of their board members and executives. We find that the sensitivity of corporate investment to shocks to real estate collateral value is halved when the length of the bank-firm relationship increases from the 25th to the 75th percentile. This effect is substantially reduced for firms whose executives have a personal mortgage relationship with their firm's bank. Our findings provide support for theories where collateral and private information are substitutes in mitigating credit frictions over the cycle.