Cover Image

A Solution to the Default Risk-Business Cycle Disconnect

costs. The model replicates observed output dynamics around defaults, countercyclical spreads, high debt ratios, and key business cycle moments. Three features of the model are central for these results: working capital loans pay for imported inputs; default triggers an efficiency loss as imported inputs are replaced by imperfect domestic substitutes; and default on public and private foreign obligations occurs simultaneously.
Year of publication:
2009
Authors: Yue, Vivian Z. ; Mendoza, Enrique G.
Institutions: Society for Economic Dynamics - SED
Extent:
application/pdf
Series:
Type of publication: Book / Working Paper
Notes:
The text is part of a series 2009 SED Meeting Papers Number 76
Source:
Persistent link: https://www.econbiz.de/10011080431
Similar items by person