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Why do advanced economies fall into prolonged periods of economic stagnation, particularly in the aftermath of credit booms? We present a model of persistent aggregate demand shortage based on strong liquidity preferences of households, in which we incorporate financial imperfections to study...
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Uncertainty about a possible harm is obviously relevant in deciding how much to regulate. More surprisingly, however, risks that are completely unrelated to the subject of the regulation can also be important. In particular, uncertainties about the future trajectory and distribution of economic...
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between growth and investment; this association is enhanced by leverage, especially for high-growth firms. This supports the … view that short-term debt helps Chinese firms to make optimal use of leverage and therefore make better investment … decisions. Furthermore, the results reveal that leverage plays a disciplining and monitoring role to reduce overinvestment …
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