Data and Code: Fragile New Economy: Intangible Capital, Corporate Savings Glut, and Financial Instability

Principal Investigator(s):  View help for Principal Investigator(s) Ye Li, University of Washington-Seattle

Version:  View help for Version V1

Name File Type Size Last Modified
  data_codes 12/07/2024 05:13:PM

Project Citation: 

Li, Ye. Data and Code: Fragile New Economy: Intangible Capital, Corporate Savings Glut, and Financial Instability. Nashville, TN: American Economic Association [publisher], 2025. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2025-03-10. https://doi.org/10.3886/E183683V1

Project Description

Summary:  View help for Summary The transition towards an intangible-intensive economy reshapes financial system by creating a self-perpetuating savings glut in the production sector. As intangibles become increasingly important, firms hoard liquidity to finance investment in intangibles of limited pledgeability. Firms' savings feed cheap leverage to financial intermediaries and allow intermediaries to bid up asset prices, which in turn encourages firms to save more for asset creation. This paper develops a macro finance model that offers a coherent account of the rising corporate savings, debt fueled growth of intermediaries, declining interest rates, and rising asset valuation. Along these secular trends, endogenous financial risk accumulates.

Scope of Project

Subject Terms:  View help for Subject Terms Regression; graph; summary statistics
JEL Classification:  View help for JEL Classification
      C68 Computable General Equilibrium Models
      D21 Firm Behavior: Theory
      D22 Firm Behavior: Empirical Analysis
      D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
      D25 Intertemporal Firm Choice: Investment, Capacity, and Financing
      D51 Exchange and Production Economies
      D53 General Equilibrium and Disequilibrium: Financial Markets
      D58 Computable and Other Applied General Equilibrium Models
      E02 Institutions and the Macroeconomy
      E13 General Aggregative Models: Neoclassical
      E22 Investment; Capital; Intangible Capital; Capacity
      E32 Business Fluctuations; Cycles
      E41 Demand for Money
      E43 Interest Rates: Determination, Term Structure, and Effects
      E44 Financial Markets and the Macroeconomy
      G01 Financial Crises
      G20 Financial Institutions and Services: General
      G30 Corporate Finance and Governance: General
      G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
Geographic Coverage:  View help for Geographic Coverage North America
Time Period(s):  View help for Time Period(s) 1/1/1980 – 12/31/2019
Collection Date(s):  View help for Collection Date(s) 1/1/2019 – 12/31/2019
Universe:  View help for Universe U.S. firms, financial intermediaries, and households.
Data Type(s):  View help for Data Type(s) aggregate data; observational data; program source code

Methodology

Data Source:  View help for Data Source Financial Accounts of the U.S., FRED, Compustat, PSID, BEA
Unit(s) of Observation:  View help for Unit(s) of Observation Country, firm, household

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Published Versions

V1 [2025-03-10]

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