Data and Code for: Earnings-Based Borrowing Constraints and Macroeconomic Fluctuations
Principal Investigator(s): View help for Principal Investigator(s) Thomas Drechsel, University of Maryland
Version: View help for Version V1
| Name | File Type | Size | Last Modified |
|---|---|---|---|
| Industry-level equipment price sensitivities | 05/26/2022 11:12:AM | ||
| Local projections | 05/26/2022 11:12:AM | ||
| SVAR | 05/26/2022 11:13:AM |
Project Description
Summary:
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This is the replication package for: "Earnings-Based Borrowing Constraints and Macroeconomic Fluctuations"
Abstract of the paper:
Abstract of the paper:
Microeconomic evidence reveals a direct link between firms’ current earnings and their access to debt. This paper studies macroeconomic implications of earnings-based borrowing constraints. In a macro model, firms with earnings-based constraints borrow more in response to positive investment shocks, whereas firms with collateral constraints borrow less. Empirically, aggregate and firm-level credit responds to identified investment shocks according to the predictions with earnings-based constraints. Moreover, with sticky prices earnings-based constraints imply that supply shocks are quantitatively more important. This is validated in an estimated version of the model, highlighting the importance of carefully modeling credit constraints to understand policy tradeoffs.
Scope of Project
Subject Terms:
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Collateral constraints;
Loan covenants;
Cash flow-based lending;
Financial frictions;
Investment-specific shocks;
Sticky prices
JEL Classification:
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E22 Investment; Capital; Intangible Capital; Capacity
E32 Business Fluctuations; Cycles
E44 Financial Markets and the Macroeconomy
G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
E22 Investment; Capital; Intangible Capital; Capacity
E32 Business Fluctuations; Cycles
E44 Financial Markets and the Macroeconomy
G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Geographic Coverage:
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United States
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