Quotation Glötzl, Florentin, Rezai, Armon. 2018. A sectoral net lending perspective on Europe. Cambridge Journal of Economics. 42 (3), 779-795.




We characterize sectoral behavior leading up to and during the Great Recession using recently available net lending and net borrowing flows of the institutional sectors in Europe and applying simple statistical derivations. We find that (1) many countries of the Northern group featured low public deficits or even budget surpluses, current account surpluses and a private sector in a net lending position, while countries of the Southern periphery, the Anglo-Saxon countries and many Eastern European economies took the mirror image; (2) with the onset of the crisis, private net lending soared in all countries, while all governments incurred deficits, consistent with the notion of a balance sheet recession; (3) private net lending is pro-cyclical while public net lending is countercyclical in all countries; (4) household net lending tends to lead the business cycle, while corporate net lending tends to lag it; and (5) prominent concepts asserting causal relationships in sectoral net lending, such as Ricardian equivalence and the twin deficit hypothesis, are not supported by our data.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Cambridge Journal of Economics
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new VW-D, WH-B
Language English
Title A sectoral net lending perspective on Europe
Volume 42
Number 3
Year 2018
Page from 779
Page to 795
Reviewed? Y
URL https://academic.oup.com/cje/article-abstract/doi/10.1093/cje/bex047/4339293/A-sectoral-net-lending-perspective-on-Europe
DOI http://dx.doi.org/10.1093/cje/bex047
Open Access N
JEL F34, E12, F45


Glötzl, Florentin (Former researcher)
Rezai, Armon (Details)
Institute for Ecological Economics IN (Details)
Socioeconomics of Work Group AB (Details)
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