A zombie firm or zombie corporation has a profit less than the interest expense on its debt. It is only possible with artificially low interest rates and a very permissible credit market. Both conditions are consequences of central bank policy. Read more about it here.
In the world of finance, something has been haunting economists and investors alike: zombie firms. The Fed has created hordes of zombie firms, with a study in April 2021 finding that over 25% of U.S. companies were zombies in 2020....
I spoke with zombie firm researcher Max Goebel to breakdown his findings on the nature and consequences of zombie lending. Max is a PhD student in Economics at the University of Lisbon and his been studying what many researchers missed....
The Zombie Ship of Theseus
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The Ship of Theseus is an old philosophical thought experiment. It asks a question about identity. Suppose you replace all of the boards of a ship...
The hot topic in monetary economics today (hah, if it’s not an oxymoron to say these terms together!) is whither interest rates. The Fed in its recent statement said the risk is balanced (the debunked notion of a tradeoff between...
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