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The Quarterly Journal of Economics· 2012Q1

Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach*

Gauti B. Eggertsson, Paúl Krugman

Short summary

A new Keynesian model shows how debt overhangs and forced deleveraging can depress aggregate demand, leading to debt-driven slumps and liquidity traps.

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Field: General Economics, Econometrics and Finance

General Economics, Econometrics and FinanceEconomics, Econometrics and Finance