Theory of Crowd Out and Accommodative Monetary Policy

Author(s):  
John J. Heim
Keyword(s):  
FEDS Notes ◽  
2021 ◽  
Vol 2021 (2957) ◽  
Author(s):  
Giovanni Favara ◽  
◽  
Camelia Minoiu ◽  
Ander Perez-Orive ◽  
◽  
...  

The unprecedented fiscal and monetary policy support in the wake of the COVID-19 pandemic has brought to the fore concerns that cheap credit could fuel the financing of zombie firms—that is, firms that are unable to generate enough profits to cover debt-servicing costs and that need to borrow to stay alive. Many observers have recently commented that zombie firms may crowd out lending to productive firms and erode the strength of the U.S. economy.


2006 ◽  
Author(s):  
Vítor Gaspar ◽  
Otmar Issing ◽  
Oreste Tristani ◽  
David Vestin

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