Bhamra, Harjoat S.; Fisher, Adlai J.; Kuehn, Lars-Alexander - In: Journal of Monetary Economics 58 (2011) 5, pp. 480-494
When a corporation issues debt with a fixed nominal coupon, the real value of future payments decreases with the price level. Forward-looking corporate default decisions therefore depend on monetary policy through its impact on expected inflation. We build a general equilibrium economy with...