Discover and read the best of Twitter Threads about #deleveraging
Most recents (7)
Are we ready for the next crisis? | DW Documentary via @YouTube
you must read history to get a perspective of how things went wrong or might go wrong in the foreseeable future. I have always implored students to take more courses in Economic History, and the History of Economic Thought, instead of blindly selecting mathematical economics,
financial engineering, and econometrics style courses in the third year of their honours degree.
I would advise students to read #Minsky's Hypothesis and how he predicted that financial stability will lead to instability sometimes!
I would advise students to read #Minsky's Hypothesis and how he predicted that financial stability will lead to instability sometimes!
While #deleveraging was a major task for China’s macroeconomic policy over past few years,it has been less covered in official documents lately. But its effects on economy still continue,both on micro entities and macroeconomy,cf40 member Wu Ge finds more: mp.weixin.qq.com/s/hMSgV0_gJYC6…
It is necessary to look into the effects of deleveraging on corporates’ balance sheet, which is helpful to understand changes in investment behaviors of micro entities and forecast the development orientation of macroeconomy.
To private firms, deleveraging has raised their capital costs; however, due to the “non-neutrality” of competition between private firms and #SOEs over the past 40 years, deleveraging can hardly fully explain rising fund costs of private firms.
While #deleveraging was a major task for China’s macroeconomic operation over past few years,it has been less covered in official documents lately.But its effects on economy still continue,both on micro entities ¯oeconomy,cf40 member Wu Ge finds more: mp.weixin.qq.com/s/hMSgV0_gJYC6…
It is necessary to look into the effects of deleveraging on corporates’ balance sheet, which is helpful to understand changes in investment behaviors of micro entities and forecast the development orientation of macroeconomy.
To private firms, deleveraging efforts have raised capital costs,restricting investment expansion; however, due to the “non-neutrality” of competition between private firms and #SOEs over the past 40 years, deleveraging can hardly fully explain rising fund costs of private firms.
1/6 As Powell puts in his recent speech, we are “in a world of slow global growth, low inflation, and low interest rates…" and "fac[ing] heightened risks of lengthy, difficult-to-escape periods in which our policy interest rate is pinned near zero.” 
2/6 CF40 member Miao Yanliang mentioned in his book that, under a #fiscal policy framework, the #demographic change and pessimistic anticipation collectively contribute to the world characterized by LOW #inflation, LOW #growth and LOW interest rate.
mp.weixin.qq.com/s/6q8SJ9RHmrKh…
mp.weixin.qq.com/s/6q8SJ9RHmrKh…
3/6 After the global financial #crisis in 2008, major developed countries faced pressure to reduce #deficits, #debt, and private sector #deleveraging. In this context, the macro-policy has shifted from the former #monetary dominance to #fiscal dominance. #macroeconomics
3 implications of Modern Money Theory on current situation:
1.fiscal expansion should play a bigger role in counter-cyclical adjustments to maintain stable growth. Monetary policy transmission mechanisms should rely less on credits and give stronger support for fiscal expansion.
1.fiscal expansion should play a bigger role in counter-cyclical adjustments to maintain stable growth. Monetary policy transmission mechanisms should rely less on credits and give stronger support for fiscal expansion.
2. to facilitate #deleveraging and financial cyclical adjustments, the structure of broad money should be adjusted even if we have already maintained steady growth and counter-cyclical measures seem less necessary.
3.a key measure to loosen fiscal policies is to cut tax&fees. A criticism of Modern Monetary Theory is that higher fiscal expenditures squeeze the private sector' wealth, while fiscal expansion can be achieved not just by spending more but also by cutting taxes.
By Peng Wensheng.
By Peng Wensheng.
Despite that the #tradewar between #China and the #US has played a role, the spillover effect as a result of China’s #deleveraging drive is the major cause for the downturn in global #economy since 2018.
In 2018, #China’s economy greatly slowed down due to the impact of #deleveraging, but also took on a new feature–that #investment was no longer the cause for inadequate domestic #demand; instead, the decline in the growth rate of household #consumption greatly encumbered growth.
This was because the #deleveraging policy had resulted in an abnormal squeeze on the #cashflow for financial transactions in the household sector, which had to reduce #consumption to maintain a balanced balance sheet.
Today, much of #China's domestic #leverage is tied to external #demand. If foreign demand slows this year, the pace or extent of domestic #deleveraging may change, too, says Wu Ge.
The increase of #residents’ #leverage ratio is much related to future #urbanization and long-term #economic structural adjustments. In this sense, residents’ leverage may rise slightly in both the short and medium term, but there is no evidence that it impacts #consumption.
In 2019, the #leverage ratio may see mild changes, and the national #economy may not experience V-shape turbulences, but moderate changes, too.
On leverage in China, Wu Ge has more:
mp.weixin.qq.com/s?__biz=MjM5Nj…
On leverage in China, Wu Ge has more:
mp.weixin.qq.com/s?__biz=MjM5Nj…
