We examine the effects of long-lived nominal debt contracts in a quantitative business cycle model with financial frictions. In our setting, as in reality, firms fund themselves with a mix of nominal defaultable debt and equity securities to issue in every period. Debt is priced fairly taking...

The recent fiscal crisis in the EU and the slow-down of the BRICS countries have raised world-wide concerns about future global growth prospects. We examine the role of doubts about both local and foreign economic shocks by constructing an international endogenous growth model with technology...