The mainstream economic theory argues that savings positively affect economic growth. Keynes, on the contrary, claims that an increase in savings lowers economic growth, as reduced consumption negatively affects investment. A number of studies also argue that due to the adjustment costs and...

According to mainstream economic theory, deflation is evil, and monetary policy should provide a certain level of inflation as a buffer against the risks of deflation. However, there are some studies that argue that deflation is good for the economy and economic growth may occur alongside low...

As uncertainty always exists, money hoarding that negatively affects economic activity cannot be completely eliminated, it can only be diminished. The paper argues that the scale of money hoarding varies depending on the type of the financial system, and it is asserted that 1) in the debt-based...

Despite ultra-easy monetary policy in US, Eurozone and Japan, lending interest rate remains higher than expected profitability. However minimal lending interest rate in advanced economies diminishes the Central Banks' ability to stimulate economic growth. Paper argues that high interest rate is...

Paper provides analysis of the impact of interest rates on manufacturing's share of GDP across countries and argues that 1) interest rates differently affects tradable and non-tradable sectors, 2) manufacturing is more sensitive to interest rate fluctuations than the non-tradable sectors, and 3)...

One of the most important problems of resource-rich countries is Dutch disease whose main feature is the appreciation of the domestic currency that reduces the competitiveness of tradable sector and redirects resources from tradable sector to the natural resource and non-tradable sectors which...

Paper considers the impact of cash, debt, trade credit and equity financing on firm efficiency. Paper argues that 1) cash holding negatively affects firm efficiency, 2) debt and trade credit have both positive and negative impact on efficiency, 3) debt and trade credit are more conducive to...

The paper explores the role of credit in business cycle and it is noted that one of the factors contributing to the cyclicity of economy is the difference between firms' profitability and interest rate on loans. The paper says that the amplitude of business cycles may be decreased through the...

The paper investigates the reasons why easy monetary policy in the US, Euro area and Japan doesn't promote economic growth. The paper argues that (i) ineffectiveness of easing monetary policy is caused by cash hoarding caused by excess of deposits over loans and (ii) cash hoarding is caused by...

The paper investigates the problem of the excess of deposits in banks over loans observed in the US, Europe and Japan, resulting in the cash hoarding in banks. The paper argues that as the higher the borrowers' debt service ratio, the greater default risks, borrowers with high debt service ratio...