I’ve been writing about inflation for the better part of three months. It’s been exhausting. Most of my time has been spent debunking misconceptions promoted by mainstream economists. Fortunately, I’m ready to move on. What’s interesting about inflation is not the fact that prices rise....

This paper is part of a dialogue with Blair Fix on how inflation redistributes income between creditors and workers and the way in which monetary policy affects this process. In his 2023 paper, ‘Inflation! The Battle Between Creditors and Workers’, Fix shows, first, that the impact of U.S....

Relying on an unbalanced panel of 25,211 observations of Polish unlisted companies for the period 2005-2018, we employ panel data analysis to investigate the role of the capital maintenance principle in securing creditors' interests. We document a persistently higher level of indebtedness among...

This paper is part of a dialogue with Blair Fix on how inflation redistributes income between creditors and workers and the way in which monetary policy affects this process. In his 2023 paper, 'Inflation! The Battle Between Creditors and Workers', Fix shows, first, that the impact of U.S....

I propose a theoretical framework in which lenders may suffer repayment preference shocks that encourage early and costly termination of a loan contract. Covenant-lite loans limit the circumstances in which lenders can withdraw or renegotiate credit agreements, and thus insulate lenders from...

Violations of financial covenants shift control rights to lenders. When borrowers have lending relationships with these lenders in control, they experience not only smaller declines in investment, but also lesser deteriorations in both firm survival prob- abilities and in sales. These effects...

At all times a debtor exist when there is a creditor. According to the current Rwandan law relating to insolvency, it is provided that the commencement of the insolvency proceedings shall lead to the stay of among others the individual actions or proceedings concerning the debtor’s rights,...

The Great Depression and the Dust Bowl of the 1930s presented unprecedented problems for Canadians in general, and farmers specifically. The severe financial hardship faced by prairie farmers ultimately led to the enactment of a novel farm insolvency statute – the most progressive statute of...

The recent bankruptcies of Johnson & Johnson, the Boy Scouts of America, and Purdue Pharma have thrust the tight-knit world of Chapter 11 bankruptcy practice under the spotlight of public scrutiny. The Purdue case in particular sparked outrage and accusations that the Chapter 11 system serves...

Official (government-to-government) lending is much larger than commonly known, often surpassing total private cross-border capital flows, especially during disasters such as wars, financial crises and natural catastrophes. We assemble the first comprehensive long-run dataset of official...

Firms with credit-default swaps (CDS) traded on their debt may face "empty creditors" as hedged creditors have less incentive to participate in firm restructuring. We test for the existence of empty creditors by employing an exogenous change to the bankruptcy code in Germany that effectively...

We study sovereign external debt crises over the past 200 years, with a focus on creditor losses, or "haircuts". Our sample covers 327 sovereign debt restructurings with external private creditors over 205 default spells since 1815. Creditor losses vary widely (from none to 100%), but the...

I investigate the effect of subsidiary debt issuance on the bond- and stock- value of its parentfirm. Parent bondholders suffer a negative abnormal return of 35 bps in the week of thesubsidiary debt, but a jump in the stock returns by 70 bps. Consistent with bondholdersanticipating a transfer of...

A book review of a history of bankruptcy in the United States told through an interdisciplinary lens of law, history and economics. The main contribution of this book is to evaluate changes in federal bankruptcy rates and bankruptcy law in relation to state collections law. Bankruptcy in America...

International financial institutions (IFIs) generally enjoy preferred creditors treatment (PCT). Although PCT rarely appears in legal contracts, when sovereigns restructure bilateral or commercial debts, they normally pay IFIs in full. This paper presents a model where a creditor, such as an...

Firms with credit-default swaps (CDS) traded on their debt may face "empty creditors" as hedged creditors have less incentive to participate in firm restructuring. We test for the existence of empty creditors by employing an exogenous change to the bankruptcy code in Germany that effectively...

Sovereign debt crises are difficult to solve. This paper studies the "holdout problem", meaning the risk that creditors refuse to participate in a debt restructuring. We document a large variation in holdout rates, based on a comprehensive new dataset of 23 bond restructurings with external...

This paper analyses the emergence of internal debtor-creditor relationships within a monetary union. Developing a stock-flow consistent model consisting of three regions - North, South, and the Rest of the World (RoW), where North and South form a monetary union - it shows how the simultaneous...

This paper analyses the emergence of internal debtor-creditor relationships within a monetary union. Developing a stock- ow consistent model consisting of three regions - North, South, and the Rest of the World (RoW), where North and South form a monetary union - it shows how the simultaneous...

We analyze the effects of government spending in a New-Keynesian model with search and matching frictions featuring endogenous growth through learning-by-doing and skill loss from long-term unemployment. We show that medium-run and long-run output and unemployment multipliers are much larger...

This paper finds that debt-financed fiscal multipliers vary depending on the location of the debt buyer. In a sample of 33 countries fiscal multipliers are larger when government purchases are financed by issuing debt to foreign investors (non-residents), compared to when they are financed by...

Why do banks remain passive? In a model of bank-firm relationship we study the trade-off a bank faces when having defaulting firms declared bankrupt. First, the bank receives a payoff if a firm is liquidated. Second, it provides information about a firm's type to its competitors. Thereby,...

The Debt Service Suspension Initiative (DSSI) for Poorest Countries provides for a time-bound suspension of debt repayments to public creditors. Commercial creditors, however, are not so bound. Earlier this year there was an initiative to introduce a moratorium on debt service on sovereign bond...

Official ending is much larger than commonly known, often surpassing total private cross-border capital flows, especially during wars, financial crises and natural catastrophes. This paper assembles the first comprehensive long-run dataset of official international loans, covering 230,000 loans,...