KANG, JOHNNY; PFLUEGER, CAROLIN E. - In: Journal of Finance 70 (2015) 1, pp. 115-162
type="main" <title type="main">ABSTRACT</title> <p>We argue that corporate bond yields reflect fears of debt deflation. When debt is nominal, unexpectedly low inflation increases real liabilities and default risk. In a real business cycle model with optimal but infrequent capital structure choice, more uncertain or...</p>