ABSTRACT
It is well established that the United States is the only major industrialized country in which firms have experienced increases in both leverage and interest burden over the 1980s (Remolona 1990). Researchers have also argued that they do not find the increase in corporate leverage in the United States disturbing, since sectors with highly leveraged firms have been the noncyclical ones. Does this then imply that the leveraging up by firms in the United States should not raise any concern? In addition, has the deleveraging by firms in the rest of the industrialized world uniformly rendered firms more resilient? The answer depends not only on the level of leverage of firms in cyclical sectors but also on the change in leverage of cyclical firms.
