Leverage and GDP volatility

Abstract

The Descriptive evidence, classify the firms: in firms with Leverage over the average, firms with Leverage down the average and firms with Leverage between the mean and median (the most efficient group). This part also classify the firms in important economic sectors: Construction (economic sector with overinvestment), Manufacturing, Retail Trade, Transportation & Public Utilities and Services. The Econometric results, conclude that the Leverage and the Operating Profit have an inverse correlation. Moreover in the relation between Leverage and Turnover the Econometric results found that in the economic expansion period, an increase in the Leverage can help firms to increase their Turnover, but in the economic crisis period Leverage and Turnover don't have correlation. The Ideas, suggests ideas as leverage strategies to invest, a reference Leverage Ratio, index for price bubbles in economic sectors and the idea that the high aggregate leverage can predict a high GDP volatility in subsequent years.