Indicators of fragility in the UK corporate sector
Gertjan Vlieghe ()
Bank of England working papers from Bank of England
The determinants of the aggregate corporate liquidation rate in the United Kingdom are estimated from a sample of quarterly data using an autoregressive distributed lag (ARDL) approach which allows for non-stationarity of the variables. The paper investigates what the appropriate measures of indebtedness are, and examines whether the unprecedented spike in the corporate liquidation rate in the United Kingdom in 1992 caused a breakdown in the relationship between the variables. The debt-to-GDP ratio, the real interest rate, deviations of GDP from trend and real wages are found to be long-run determinants of the liquidation rate. The birth rate of new companies, an index of property prices and nominal interest rates have significant short-term effects. The estimated equation is robust to changes in the sample period. The rapidly increasing level of indebtedness in the late 1980s was the main determinant of the subsequent increase in the liquidation rate. The decrease in the liquidation rate after 1992 was primarily due to lower real interest rates, lower real wages and the cyclical recovery of GDP.
New Economics Papers: this item is included in nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20) Track citations by RSS feed
Downloads: (external link)
http://www.bankofengland.co.uk/archive/Documents/h ... apers/2001/wp146.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/2001/wp146.pdf [301 Moved Permanently]--> https://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/2001/wp146.pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:146
Access Statistics for this paper
More papers in Bank of England working papers from Bank of England Bank of England, Threadneedle Street, London, EC2R 8AH. Contact information at EDIRC.
Bibliographic data for series maintained by Digital Media Team ().