Mr Thomas Drechsel

Mr Thomas Drechsel

PhD Candidate in Economics

Department of Economics

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English, French, German
Key Expertise
Macroeconomics, Macro-Finance

About me

Job Market Placement
Assistant Professor, University of Maryland College Park

Research interests
Macroeconomics, Macro-Finance (primary)
International Macro, Macroeconometrics (secondary)

Job market paper
Earnings-Based Borrowing Constraints and Macroeconomic Fluctuations

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Microeconomic evidence on US corporate credit suggests a strong connection between firms' current earnings and their access to debt. This paper formalizes this link through an earnings-based constraint on firm borrowing and studies its macroeconomic implications. In a business cycle model, the proposed constraint alters the response of firm borrowing to shocks relative to an asset-based collateral constraint, which has become a standard building block in macroeconomics. In response to a positive investment shock, corporate debt expands when the earnings-based constraint is present, while it contracts with a collateral constraint, as the shock reduces the relative value of capital. The paper empirically verifies these theoretical predictions using both aggregate and firm-level data. The positive response of aggregate debt to investment shocks in the data supports the economy-wide relevance of earnings-based constraints, and heterogeneous debt dynamics across borrower types at the firm-level are in line with the proposed mechanism. Finally, in an estimated quantitative model with nominal rigidities, earnings-based constraints dampen the output response to fiscal shocks, whereas monetary shocks have stronger but less persistent effects relative to counterfactual estimations with collateral constraints.

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Publications and additional papers


“Commodity Booms and Busts in Emerging Economies” (with Silvana Tenreyro), Journal of International Economics, Vol. 112, May 2018, pp. 200-2018.

“Tracking the Slowdown in Long-Run GDP Growth” (with Juan Antolin-Diaz and Ivan Petrella), Review of Economics and Statistics, Vol. 99(2), May 2017, pp. 343-256.

“Who Borrows from the Lender of Last Resort?” (with Itamar Drechsler, David Marqués Ibañez and Philipp Schnabl), Journal of Finance, Vol. 71(5), October 2016, pp. 1933-1974. Lead Article.


Working Papers:

“Agnostic Structural Disturbances (ASDs): Detecting and Reducing Misspecification in Empirical Macroeconomic Models” (with Wouter Den Haan), CEPR Working Paper 13145. Revise and resubmit at the Journal of Monetary Economics. 


Placement Officer
Professor Mark Schankerman

Professor Silvana Tenreyro 

Professor Silvana Tenreyro 
Professor Wouter Den Haan
Professor Ricardo Reis
Professor Per Krusell

Contact information


Phone number 
+44 (0)7593605978

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Office Address
Department of Economics,
London School of Economics and Political Science,
Houghton Street, London WC2A 2AE