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Article: On the macroeconomics of private debt.
- Article from:
- Federal Reserve Bank of St. Louis Review
- Article date:
- January 1, 1993
- Author:
CopyrightCOPYRIGHT 1993 Federal Reserve Bank of St. Louis. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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During the 1980s, private-sector borrowing expanded to such an extent that many analysts became concerned that the accumulated debt would be a drag on spending, making the recession worse if and when it occurred and slowing the ensuing recovery.
This article examines the role of private nonfinancial debt in the U.S. economy after putting recent debt trends in perspective and discussing the economic role of debt, Carlson considers the macroeconomic effects of debt. He finds that economic activity almost always leads the debt cycle; debt seems to respond to the business cycle rather than the other way around. Furthermore, movements in total spending do not appear to ...