Alp Simsek on a Risk-Centric View of Demand, Recession, and Speculation
Macro Musings with David Beckworth
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Is Leverage a Strong Form of Forward Guidance?
When you have recessions tied to equity like the stock market You know crash in 2001 They tend to do better Than recessions where you have high leverage like in 2008. The 2001 recession was much milder or in general While the recession that don't involve levered agents are much milder than and others. This heterogeneous valuation that I've described is a lot more this becomes a lot more damaging when the Agents that are hit are highly levered Because leverage amplifies Gaines and the loss right so imagine 2001 recession sort of mainly hit the started in this the stock market So the stock might collapse well to levered agents in the economy banks these division investors are typically not that involved in the
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