balance sheet recession Concepts

Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead

by Kenneth Rogoff · 27 Feb 2025 · 330pp · 127,791 words

of Monetary Policy Transmission,” Journal of Economic Perspectives 9, no. 4 (Fall 1995): 27–48. Richard Koo later coined the term “balance sheet recessions” in the context of Japan. Richard Koo, Balance Sheet Recession: Japan’s Struggle with Uncharted Economics and Its Global Implications (New York: Wiley, 2003). Carmen Reinhart and I provided a large multicountry

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis

by Martin Wolf · 24 Nov 2015 · 524pp · 143,993 words

crises do that? And why did the recovery stall or even go into reverse, in some cases? To answer those questions, we need to understand balance-sheet recessions. THE ECONOMICS OF POST-CRISIS DE-LEVERAGING Big financial crises cause painful recessions. Big financial crises that follow huge credit booms cause particularly painful recessions

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, even more, a weakening of demand relative to the weakened supply. The danger is a prolonged period of what Richard Koo of Nomura Research calls ‘balance-sheet recession’, in which the debt-encumbered private sector either tries, or is forced, to lower its debts – or, at the least, is unwilling or unable to

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balances – the balance between income and spending of households, corporations, the government and foreigners – offers a classic picture of an economy going into such a balance-sheet recession. Foreigners have run a surplus with the US for a long time and continued to do so, on a slightly smaller scale, following the crisis

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as it had been in 1930. Unfortunately, policymakers failed to sustain the policies required to support private-sector de-leveraging and so avoid a prolonged balance-sheet recession. Largely as a result, the recovery proved weak or even withered away altogether in 2011 and 2012. For this unhappy outcome, the Eurozone crisis was

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that back such debt collapse and the economy shrinks, a chain of bankruptcies threatens the economy, including large parts of the financial sector. Such a ‘balance-sheet recession’ is the biggest danger consequent upon a huge credit boom.40 The second aspect concerns the structure of balance sheets. Overall demand for high-grade

The End of Alchemy: Money, Banking and the Future of the Global Economy

by Mervyn King · 3 Mar 2016 · 464pp · 139,088 words

tended to be slower than downturns unaccompanied by such crises.2 But there is no unique pattern across different episodes. Diagnoses using expressions such as ‘balance sheet recession’, ‘headwinds’ and ‘secular stagnation’, which have all entered the currency of popular debate, are descriptions of symptoms, not causes.3 What are the underlying drivers

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International Settlements promoted the idea that the risks from rising levels of debt were a threat to stability and that the resulting crisis was a ‘balance sheet recession’ (see various of their annual reports). Lawrence Summers, the Harvard economist and former Treasury Secretary, argued at an International Monetary Fund conference on 16 November

Austerity: The History of a Dangerous Idea

by Mark Blyth · 24 Apr 2013 · 576pp · 105,655 words

the world. This is hyperbolic neoliberal fantasy looking for a set of supporting econometrics. Simply paying back debt when the economy is tanking, a classic “Balance Sheet Recession” a la Richard Koo, would suffice to explain what’s going on.129 That consumption didn’t rise is not a surprise unless you frame

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, “The Swedish Banking Crisis: Roots and Consequences” Oxford Review of Economic Policy 15, 3 (1999): 89. 128. Ibid., 94. 129. Richard Koo, “The World in Balance Sheet Recession,” Real-World Economics Review 58 (2011): 19–37. 130. Roberto Perotti’s discussion of Sweden in “The ‘Austerity Myth’” is a vastly superior account of

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austerity, 97–98, 101, 125–131 “paradox of thrift”, 8 rediscovery of, 221 Kinsella, Stephen, 61, 208 Kirkman, Geoffrey, ix Kirshner, Jonathan, 202 Koo, Richard “Balance Sheet Recession”, 211 Konczal, Mike, 212, 213 Krugman, Paul, 11, 55, 165, 207 and the euro, 78 Krups, 132 Kuronuma, Yuji, 197 Kwak, James, 11 Kydland, Finn

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory

by Kariappa Bheemaiah · 26 Feb 2017 · 492pp · 118,882 words

, C. A. (2014). Internal debt crises and sovereign defaults. Journal of Monetary Economics, Elsevier, vol. 68(S) , S68-S80. Koo, R. (2014). The Escape from Balance Sheet Recession and the QE Trap: A Hazardous Road for the World Economy. Wiley. Retrieved from http://www.eunews.it/docs/koo.pdf Luigi Buttiglione, P. R

Expected Returns: An Investor's Guide to Harvesting Market Rewards

by Antti Ilmanen · 4 Apr 2011 · 1,088pp · 228,743 words

be stronger when Fed tightening causes recessions and Fed easing leads the recovery, typical features of postwar business cycles. The story may be different in balance sheet recessions caused by financial de-leveraging, as in the 1930s and 2008, where the Fed has less power to affect the economy. Not surprisingly, many firms

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cycles differ in their depth and duration. The most important contrast is between typical post-World War II recessions, arguably caused by Fed tightening, and balance sheet recessions, caused by de-leveraging after financial excesses (as in the 1930s and 2000s); the latter are more severe. It is also interesting to observe how

The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All

by Martin Sandbu · 15 Jun 2020 · 322pp · 84,580 words

. Irving Fisher, “The Debt-Deflation Theory of Great Depressions,” Econometrica 1, no. 4 (1933): 337–57; Richard Koo, “Balance Sheet Recession Is the Reason for ‘Secular Stagnation,’ ” VoxEU, 11 August 2014, https://voxeu.org/article/balance-sheet-recession-reason-secular-stagnation. 14. See Robert Shiller, Finance and the Good Society, Princeton, NJ: Princeton University Press, 2012

Crisis Economics: A Crash Course in the Future of Finance

by Nouriel Roubini and Stephen Mihm · 10 May 2010 · 491pp · 131,769 words

, and even the corporate sector. The recession wasn’t driven by monetary tightening; it was a “balance sheet” recession driven by a staggering accumulation of debt. Recent research by Carmen Reinhart and Kenneth Rogoff suggests that a “balance sheet” recession can lead to a weak recovery, as every sector of the economy “deleverages” and cuts down

War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt

by Kwasi Kwarteng · 12 May 2014 · 632pp · 159,454 words

financial panic. In the modern jargon beloved of today’s economists and journalists, Keynes initially identified the Great Depression as a phenomenon akin to a ‘balance sheet recession’. He continued his assessment that the ‘assets of banks in very many countries – perhaps in all countries with the probable exception of Great Britain – are

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, 342–3, 356 auto manufacturers, 315 autobahns, 133 Aztecs, 13, 22 Bagehot, Walter, 62–5, 79, 99, 127, 164, 170 ‘bailouts’, 329 Baker, Howard, 250 ‘balance sheet recessions’, 129 balanced budgets, commitment to, 6–7, 234, 245, 296, 358 Japan and, 193–4 US and, 162–3, 168–70, 202–4, 207, 209

Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity

by Joseph E. Stiglitz · 28 Jan 2020 · 408pp · 108,985 words

33 percent for Greece, 62 percent for Portugal, and 50 percent for Spain. ¶ That was why the 2008 recession was often referred to as a balance-sheet recession, but it was, of course, much more than that. # As we noted in Chapter 2, the Single Market without deposit insurance and other elements of