Zombie firms are poorly performing firms that are unable to service their debt obligations over a prolonged period. They have a marginal return on capital that is below the risk-adjusted market cost of capital (Schivardi et al. 2022), and often survive due to bank support. Caballero et al. (2008) identify zombie firms as those that […]
It is well understood that real estate lending booms can cause financial crises and weak recoveries (Schularick et al. 2014). Raising house prices that go hand-in-glove with soaring mortgage borrowing should, therefore, be seen as a cause of concern. Taking the UK as a case in point, Figure 1 shows how over the past three […]
Climate-related risks are now a recognised factor in financial decision-making and therefore in the prices of assets. Two types of climate-related risks are generally recognised: transition risks and physical risks. Transition risks arise because of changes in policies, technologies, and consumer and investor preferences that are already occurring and will need to occur in the […]
An important question in international macroeconomics is the degree to which advanced economy (AE) investors impact the economic policies of emerging market economy (EME) borrowers. The basic question about how EMEs can manage their economies has been discussed generally through the debate about the Mundell-Fleming ‘policy trilemma’ and its implications for open capital markets in […]
