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Corporate legacy debt, inflation, and the efficacy of monetary policy

Goodhart, C. A. E., Peiris, Udara, Tsomocos, Dimitrios P. and Wang, Xuan (2022) Corporate legacy debt, inflation, and the efficacy of monetary policy. VOX EU.

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Abstract

The COVID-19 pandemic has coincided with a further rapid increase in corporate indebtedness. This column argues that high levels of corporate debt may distort the transmission of monetary policy and make contractionary monetary policy less effective in controlling inflation. Consequently, the trade-off between inflation stabilisation and output stabilisation becomes more problematic when there is a large volume of corporate debt in the economy.

Item Type: Article
Official URL: https://voxeu.org/
Additional Information: © 2022 The Authors
Divisions: Financial Markets Group
Subjects: H Social Sciences > HG Finance
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
Date Deposited: 21 Mar 2022 11:36
Last Modified: 15 Sep 2023 11:26
URI: http://eprints.lse.ac.uk/id/eprint/114410

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