User:UBJAMMINN2/Balance sheet recession

In economics, a balance sheet recession is a general slowdown in economic activity caused by widespread deleveraging in the corporate sector. Examples of balance sheet recessions include The Great Depression and the Lost Decade (Japan). Balance sheet recessions typically follow asset bubbles if many companies acquired over-priced assets with debt. In a balance sheet recession, aggregate demand will fail to respond to Monetary policy because companies will pay down debt even if interest rates are zero. Richard C. Koo pioneered the concept of a balance sheet recession in his 2008 work, The Holy Grail of Macroeconomics: Lessons from Japan's Great Recession.