leveraged banks’ precautionary demand for liquidity. When adverse asset shocks materialize, a bank’s ability to roll over debt …

, stochastic environment. Keeping the firm as an ongoing concern has an option value but equity and debt holders value it … option approach, we characterize the resulting agency costs of debt, derive the ‘price’ of these costs and analyse their … dynamics. We also show how agency costs can be reduced by the design of debt and the possibility of renegotiation. …

using debt-output ratios and real interest rates. These last two variables emerge as influences on business defaults in the …

, together with drastic budgetary cuts aiming at curbing public debt to maintain sustainability. Finally, the paper tries to …

public and private debts. Sometimes the debt restructuring is more subtle and takes the form of 'financial repression …'. Consistent negative real interest rates are equivalent to a tax on bond holders and, more generally, savers. In the heavily … facilitated a sharp and rapid reduction or 'liquidation' of public debt from the late 1940s to the 1970s. The restrictions or …

participants, we find that collective-action clauses in fact reduce the cost of borrowing for more credit-worthy issuers, who … appear to benefit from the ability to avail themselves of an orderly restructuring process. In contrast, less credit …-worthy issuers pay, if anything, higher spreads. We conjecture that for less credit-worthy borrowers the advantages of orderly …

The aim of this Paper is to test for the extent of incompleteness in the market for US Government debt. We show that … when a government pursues an optimal tax policy and issues a full set of contingent claims, the value of debt has the same …. Examining US data, however, reveals that debt is substantially more persistent than other variables and increases in response to …

as inside equity and debt. We call our framework the two-stage model of firm growth. A key finding is that outside equity … promotes ex post efficiency (second stage growth) at the expense of ex ante efficiency (first stage growth), while debt works … the opposite way. This is because equity promotes replacement of the entrepreneur, while debt promotes entrenchment. So …