this correctly type checks and has identical behavior:

let x = 10;
const obj = ((function Y<B>(a:(_:() => B) => () => B): () => B {
    function Y1(b: typeof Y2): () => B {
        return b(b);
    }
    function Y2(c: typeof Y2): () => B {
        return a(() => c(c)());
    }
    return Y1(Y2);
})((rec: () => {}) => function() {
  if(--x) return rec();
  return {};
}))();