The standard measures of distress risk ignore the fact that firm defaults are correlated and that some defaults are more likely to occur in bad times. The paper uses risk premium computed from corporate credit spreads to measure a firm's exposure to systematic variation in default risk. Unlike...

When faced with financial crises, authorities worldwide tend to respond aggressively with public support measures. Given the adverse impact on moral hazard and market discipline, support measures involving public money are ideally limited to crisis situations involving systemic risk: a...

Why should countries buy expensive catastrophe insurance? Abstracting from risk aversion or hedging motives, this paper shows that catastrophe insurance may have a catalytic role on external finance. Such effect is particularly strong in those middle-income countries that face financial...

This paper introduces an"index of macroeconomic space"-- demonstrating the ability of acountry to run a countercyclical fiscal policy or a fiscal stimulus at any point in time -- to show how a sample of 20 mostly middle-income countries had entered the 2008 global financial crisis with different...

As a result of worldwide decentralization, subnational debt is rising. Subnational debt crises in major developing countries in the 1990s have led to strengthened regulatory frameworks for subnational borrowing and insolvency. With the fragility of the global recovery and increasing public debt,...

Deteriorating public finances around the world raise doubts about countries'abilities to bail out their largest banks. For an international sample of banks, this paper investigates the impact of government indebtedness and deficits on bank stock prices and credit default swap spreads. Overall,...

The authors compare the two merger control systems currently employed worldwide: a mandatory system based on merger size threshold and a voluntary system with ex-post monitoring and fines. The voluntary system possesses two informational advantages: (i) the enforcement agency employs more...