The Simple Analytics of Debt-driven Business Cycles

Palley, Thomas I.

doi:10.1057/9781137265821_4

Cited by 3 publications

(3 citation statements)

References 19 publications

(21 reference statements)

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 80%

“…It is a common phenomenon for Chinese residents to increase regular savings and reduce consumption to prevent future uncertainty (Jensen et al, 2020). Palley (2013) investigated the impact mechanism of resident debt on economic growth by constructing a linear multiplier acceleration model. The results show that as resident debts continues to accumulate, the proportion of debt interests that needs to be repaid in cash will also increase.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…When financial capital expands independently and profits increase sharply, the profit space of physical investment will be continuously compressed. The reduction of physical investment as the basis for value creation will result in insufficient corporate innovation values and further reduce the profitability of entity companies (Palley, 2013). Taken together, this manuscript proposes H3.H3 Residents' increased leverage makes the rate of return on financial assets significantly higher than the real industry, and real companies are also keen to invest in financial products to obtain higher returns.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

See 2 more Smart Citations

Does resident leverage volatility affect corporate profitability?: An empirical study from Chinese A‐share listed companies

Xie

2023

Manage Decis Econ

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The increase in resident leverage is expected to promote the growth of retail consumption, thereby creating favorable macro conditions for companies to reduce leverage and destock. However, the increase in resident leverage in China has been accompanied by a continuous decline in the growth of retail consumption, which has a negative impact on the external environment of enterprises. The unbalanced panel data of 2218 nonfinancial listed companies in China from 2010 to 2018 were used to investigate the relationship and mechanism between resident leverage and corporate profitability. The empirical results show that the increase in resident leverage has a negative impact on the profitability of Chinese companies. In addition to the direct impact, resident leverage has a transmission mechanism that affects corporate profitability through debt level, degree of financialization, and degree of zombification. In order to avoid the heterogeneity of research results caused by differences in corporate characteristics, the heterogeneity test was conducted by distinguishing the nature of enterprise ownership, innovation input, and financing constraints. The test of the heterogeneity of enterprise ownership shows that residents' increased leverage has a greater restraint on the profitability of state-owned enterprises than private

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 80%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

See 1 more Smart Citation

Does resident leverage volatility affect corporate profitability?: An empirical study from Chinese A‐share listed companies

Xie

2023

Manage Decis Econ

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Empirical Analysis of Debt Deflation on a Macro- and Micro-Economic Levels

Kufenko

2013

SSRN Journal

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Aggregate demand, endogenous money, and debt: a Keynesian critique of Keen and an alternative theoretical framework

Palley¹

2014

ROKE

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This paper presents a Keynesian critique of Steve Keen's treatment of the endogenous money-credit-aggregate demand (AD) nexus. It argues his analytic intuition is correct but is developed in the wrong direction. Keen's fundamental relation describing determination of AD in an endogenous credit money economy suffers from two flaws. First, it neglects the core Keynesian problematic of leakages from and injections into the circular flow of income. Second, it falls into the theoretical morass regarding the black box of velocity of money via its adoption of a form of Fisher equation to determine AD. The paper contrasts Keen's treatment with a Keynesian structural framework.

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The Simple Analytics of Debt-driven Business Cycles

Cited by 3 publications

References 19 publications

Does resident leverage volatility affect corporate profitability?: An empirical study from Chinese A‐share listed companies

Does resident leverage volatility affect corporate profitability?: An empirical study from Chinese A‐share listed companies

Empirical Analysis of Debt Deflation on a Macro- and Micro-Economic Levels

Aggregate demand, endogenous money, and debt: a Keynesian critique of Keen and an alternative theoretical framework

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