Search Results

Showing results 1 to 10 of approximately 24.

(refine search)
SORT BY: PREVIOUS / NEXT
Author:Gourio, Francois 

Blog
Financial Positions of U.S. Public Corporations: Part 1, Before the Pandemic

This blog is the first in a series that will discuss how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response. This first blog discusses the financial positions before the pandemic started. We document three facts: (1) the share of nonfinancial public companies with large amounts of leverage was elevated, suggesting financial fragility; however, (2) interest expenses were small for most firms due to the low level of interest rates; and (3) most firms had ...
Chicago Fed Insights

Blog
Financial Positions of U.S. Public Corporations: Part 2, The Covid-19 Earnings Shock

This blog is the second in a series that discusses how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response. The first blog discussed the financial positions before the pandemic started. It documented that many nonfinancial publicly traded companies entered 2020 with historically elevated levels of leverage. This second blog explains how we use stock returns to project the potential earnings losses due to Covid-19; this will be used in our next blog to project the ...
Chicago Fed Insights

Blog
Financial Positions of U.S. Public Corporations: Part 3, Projecting Liquidity and Solvency Risks

This blog post is the third in a series that discusses how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response.In this post, we attempt to quantify the risk to the solvency and to the liquidity of U.S. public corporations, and how this risk can be reduced or eliminated by firms’ decisions. These calculations should be taken as illustrative only, given the high uncertainty about the evolution of the economy; they do not constitute a forecast, and reflect only the ...
Chicago Fed Insights

Blog
Financial Positions of U.S. Public Corporations: Part 4, Tax Relief

This blog post is the fourth in a series that discusses how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response. In this post, we discuss the adjustments to federal tax policy that have been initiated to support U.S. businesses and their possible effects. These measures represent a significant fiscal cost ($280 billion over ten years) and an even larger positive cash flow effect for businesses in 2020 (over $700 billion), because some measures are effectively ...
Chicago Fed Insights

Blog
Financial Positions of U.S. Public Corporations: Part 5, The Main Street Lending Program: Potential Benefits and Costs

This blog post is the fifth in a series that discusses how the current pandemic affects the financial positions of publicly traded U.S. corporations, the potential implications of these financial developments, and the federal policy response. In this post, we study the economic benefits and costs of the Main Street Lending Program, created by the Federal Reserve to support corporations during this crisis. We make four points, which reflect our analysis and are not the views of the Federal Reserve System or the Federal Reserve Bank of Chicago. First, the main potential benefit of this program ...
Chicago Fed Insights

Working Paper
The Tradeoffs in Leaning Against the Wind

Credit booms sometimes lead to financial crises which are accompanied with severe and persistent economic slumps. Does this imply that monetary policy should ?lean against the wind? and counteract excess credit growth, even at the cost of higher output and inflation volatility? We study this issue quantitatively in a standard small New Keynesian dynamic stochastic general equilibrium model which includes a risk of financial crisis that depends on ?excess credit?. We compare monetary policy rules that respond to the output gap with rules that respond to excess credit. We find that leaning ...
Working Paper Series , Paper WP-2017-21

Working Paper
Credit risk and disaster risk

Credit spreads are large, volatile and countercyclical, and recent empirical work suggests that risk premia, not expected credit losses, are responsible for these features. Building on the idea that corporate debt, while safe in ordinary recessions, is exposed to economic depressions, this paper embeds a trade-off theory of capital structure into a real business cycle model with a small, exogenously time-varying risk of economic disaster. The model replicates the level, volatility and cyclicality of credit spreads, and variation in the corporate bond risk premium amplifies macroeconomic ...
Working Paper Series , Paper WP-2012-07

Working Paper
The Cross-Section of Labor Leverage and Equity Returns

Using a standard production model, we demonstrate theoretically that, even if labor is fully flexible, it generates a form of operating leverage if (a) wages are smoother than productivity and (b) the capital-labor elasticity of substitution is strictly less than one. Our model supports using labor share?the ratio of labor expenses to value added?as a proxy for labor leverage. We show evidence for conditions (a) and (b), and we demonstrate the economic significance of labor leverage: High labor-share firms have operating profits that are more sensitive to shocks, and they have higher expected ...
Working Paper Series , Paper WP-2017-22

Working Paper
Firm Entry and Macroeconomic Dynamics: A State-level Analysis

Using an annual panel of U.S. states over the period 1982-2014, we estimate the response of macroeconomic variables to a shock to the number of new firms (startups). We find that these shocks have significant effects that persist for many years on real gross domestic product, productivity and population. This is consistent with simple models of firm dynamics where a ?missing generation? of firms affects productivity persistently.
Working Paper Series , Paper WP-2016-1

Working Paper
Can Intangible Capital Explain Cyclical Movements in the Labor Wedge?

Intangible capital is an important factor of production in modern economies that is generally neglected in business cycle analyses. We demonstrate that intangible capital can have a substantial impact on business cycle dynamics, especially if the intangible is complementary with production capacity. We focus on customer capital: the capital embodied in the relationships a firm has with its customers. Introducing customer capital into a standard real business cycle model generates a volatile and countercyclical labor wedge, due to a mismeasured marginal product of labor. We also provide new ...
Working Paper Series , Paper WP-2014-2

FILTER BY year

FILTER BY Content Type

Working Paper 11 items

Newsletter 6 items

Blog 5 items

Journal Article 2 items

FILTER BY Jel Classification

E32 4 items

E31 2 items

E52 2 items

E58 2 items

C61 1 items

E13 1 items

show more (18)

FILTER BY Keywords

Covid-19 5 items

Financial positions 3 items

monetary policy 3 items

productivity 3 items

Business cycles 2 items

economic 2 items

show more (71)

PREVIOUS / NEXT