Balance sheet recession/Definition: Difference between revisions
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A [[recession]] that occurs when banks or households attempt to correct a sudden increase in their [[leverage]] (brought about, for example, by the bursting of an [[asset price bubble]]), as a result of which banks use deposits to increase their reserves rather to give credit, and householders use income to pay | A [[recession]] that occurs when banks or households attempt to correct a sudden increase in their [[leverage]] (brought about, for example, by the bursting of an [[asset price bubble]]), as a result of which banks use deposits to increase their reserves rather to give credit, and householders use income to pay off debt rather than to make purchases. | ||
Latest revision as of 16:01, 28 February 2013
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Balance sheet recession [r]: A recession that occurs when banks or households attempt to correct a sudden increase in their leverage (brought about, for example, by the bursting of an asset price bubble), as a result of which banks use deposits to increase their reserves rather to give credit, and householders use income to pay off debt rather than to make purchases.