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Failure to Launch: Housing, Debt Overhang, and the Inflation Option During the Great Recession

Aaron Hedlund
2015 Social Science Research Network  
Can inflating away nominal mortgage liabilities cure debt overhang and combat a severe housing bust?  ...  With a focus on the Great Recession, I address this question using a structural macroeconomic model of illiquid housing, endogenous credit supply, and equilibrium default.  ...  The problem for homeowners with bad credit is analogous, except that they lack access to the mortgage market.  ... 
doi:10.2139/ssrn.2573263 fatcat:qqmrfvd7wrb63a6m5jxag2q4la


John R. Kreidle
1960 Journal of Finance  
con sumer credit is usually itself a product of the recovery.  ...  .^3 in stalment credit does not occupy a position of relatively great impor tance in business movements even though this type of credit is much the same as other types.  ...  Inflationary Pressures under Conditions of Unemployment.  ... 
doi:10.1111/j.1540-6261.1960.tb01607.x fatcat:dvhw5lwquvf7rgsrnvuzu3lbwm

The Transmission Mechanism of Monetary Policy [chapter]

C. A. E. Goodhart
1989 Money, Information and Uncertainty  
Positive shocks (such as followed from the removal of the 'Corset' and consumer-credit controls in the early 1980s) may by contrast induce a credit boom that has inflationary consequences.  ...  We focus first on those with significant debts, and return to those with net savings below.  ... 
doi:10.1007/978-1-349-20175-4_12 fatcat:52vlpizksjbwdpl6uwzndqqeiu

Failure to Launch: Housing, Debt Overhang, and the Inflation Option

Aaron Hedlund
2019 American Economic Journal: Macroeconomics  
Can inflating away nominal mortgage liabilities effectively combat recessions? I address this question using a model of illiquid housing, endogenous credit supply, and equilibrium default.  ...  However, during episodes like the Great Recession, inflation effectively boosts house prices, consumption, and dramatically cuts foreclosures, but only when fixed rate mortgages are the dominant instrument  ...  Homeowners with bad credit standing (f = 1) have state (y, h, s), and renters have state (y, s).  ... 
doi:10.1257/mac.20160371 fatcat:zrube6ttjvcvdi2mfjfqjs2uxe

Inflation, operating cycle, and cash holdings

Yanchao Wang, Yu Ji, Xu Chen, Chunlei Song
2014 China Journal of Accounting Research  
There is also a U-shaped relationship between operating cycle and cash holdings, and this relationship is similarly influenced by changes in the inflation level.  ...  At the macrolevel, firms are inclined to adjust and optimize their cash-holding strategies in response to changes in purchasing power due to inflation.  ...  and Economics, China.  ... 
doi:10.1016/j.cjar.2013.07.001 fatcat:6md3lm3oebfldbig6h3auepv7q

Free Falling with a Parachute that May Not Open: Debtor-in-Possession Financing in the Wake of the Great Recession

Jarrod Martin, Kristofor William Nelson, Eric Rudenberg, Jonathan Squires
2009 Social Science Research Network  
As one credit analyst put it, "Why would you lend to an insolvent company when you can invest in other [debt] products with [similar] risk and higher returns?"  ...  Consumers are still too painfully aware of hitting rockbottom, and not enough progress has been made or enough time has passed to induce a false sense of self-control over their addiction to credit.  ... 
doi:10.2139/ssrn.1430566 fatcat:7iofhgxdmjc2do5yy3h23a2wai

Old habits die hard

Martin Raiser
1993 Intereconomics. Review of European Economic Policy  
However, Keynesians offer no explanation for persistent inflationary tendencies under conditions of depressed demand.  ...  Under such conditions lending rates are ~D Note that under conditions of high dollarisation in the economy, a price liberalisation combined with inland convertibility and exchange rate devaluation does  ... 
doi:10.1007/bf02926196 fatcat:ucoswtporrejjhxexs6ezeajeq

Inflation and Stagnation in Brazil

Samuel A. Morley
1971 Economic development and cultural change  
If they are then reapplied later, the economy alternates between periods of real stagnation and inflationary growth. Such a policy is as bad as no inflation program at all.  ...  18.5 percent from the end of 1962 to the end of 1965), behavior which could be interpreted as a reaction to the tight credit conditions induced by the reduction in Bank of Brazil loans to the private  ... 
doi:10.1086/450478 fatcat:remsox7ypbamnmanaasv3ramwe


Paul W. McCracken
1950 Journal of Finance  
With the inventory recession, private demand for credit began to weaken.  ...  and rates of public debt issues, and with the Federal Reserve taking the necessary action to implement these decisions.  ... 
doi:10.1111/j.1540-6261.1950.tb02468.x fatcat:n6vbmzykebgdnbuljemecpsiei

The Present Status of Monetary and Fiscal Policy

Paul W. McCracken
1950 Journal of Finance  
With the inventory recession, private demand for credit began to weaken.  ...  and rates of public debt issues, and with the Federal Reserve taking the necessary action to implement these decisions.  ... 
doi:10.2307/2975494 fatcat:3grm22lnfva4jj4estfrppuzbq

What ails China?: A long-run perspective on growth and inflation (or deflation) in China [chapter]

Loren Brandt, Xiaodong Zhu, Wendy Dobson, A.E. Safarian
2002 East Asia in Transition  
Since 1994, China has experienced a prolonged period of sluggish growth and declining inflation. Prices have actually declined over much of the last three and a half years.  ...  These problems are often attributed to conditions of weak aggregate demand.  ...  Bad Debt, Budget Constraint Hardening, and Bank Conservatism The SOBs have become much more cautious in making loan decisions in recent years.  ... 
doi:10.3138/9781442674219-004 fatcat:5fo2fiezlreqjlq23mltx7eb2a

Monetary policy and world commodity markets: 2000-2007

Hossein Askari
2010 PSL Quarterly Review  
policy with subsequent sustained economic growth and financial and price stability.  ...  Policymakers face a policy dilemma: maintain expansionary monetary policy stance with persistent commodity price inflation, subsequent severe world recession, and financial disorder, or tighten monetary  ...  Any small credit squeeze, under these conditions of heavy dependence on credit expansion and inflation, will stifle speculative activities, increase the debt burden, and sharply reduce demand for assets  ... 
doaj:4b30a18aa845403cba7d4efca21be783 fatcat:e5jrpw4fq5a4dkodsuqgjo2naa

The Economic Outlook

Edward A. Keller
1953 Financial analysts journal  
Of particular concern after 1979 was the danger that high inflation rates might be pushed even higher if energy-induced and other price increases were validated and built into inflationary expectations  ...  The longer the decision on the deficit is postponed, the greater the risk of another credit crunch and increased economic instability.  ...  Under these conditions, the federal debt-GNP ratio would continue to rise without limit, unless the large primary deficits were turned into large primary surpluses. 15/ This analysis assumes that the size  ... 
doi:10.2469/faj.v9.n1.47 fatcat:sfnbu6q5uva3tat7ivwmj63ota

Evidence on the "Tax Effects" of Inflation Under Historical Cost Accounting Methods

Nicholas J. Gonedes
1981 The journal of business  
., the use of historical cost accounting methods) implies that real income tax rates will vary directly with rates of inflation.  ...  This is the "tax effects of inflation" hypothesis.  ...  inflation are "bad for business."  ... 
doi:10.1086/296130 fatcat:zchw6qbltjg4nfhomrnecgfywe


2017 Criterio Libre  
Forced liquidation of real assets in order to repay debts and to correct the distortions created in the structure of production caused by the inflationary credit expansion leaves room for some speculative  ...  A different society with a different structure of production and with different institutions will have a different business cycle in the face of inflationary credit expansion.  ... 
doi:10.18041/1900-0642/criteriolibre.2011v9n15.1201 fatcat:syjrtdwo4bfkrgowu537ppheje
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