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These brief essays delve into the economic issues of the day for a generally informed readership.

2011, No. 30 (Posted 2011-09-20)

Searching for the Financial Accelerator: How Credit Affects the Business Cycle

by Adrian Peralta-Alva

Firms started repaying their debts during 2008-2009, and they did so while simultaneously accumulating highly liquid assets. These two observations are puzzling if one believes firms are purportedly starving for credit but cannot obtain it.

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