Article ID Journal Published Year Pages File Type
967488 Journal of Monetary Economics 2011 15 Pages PDF
Abstract
► We build a general equilibrium economy with corporate default. ► Corporation issues long-term debt with a fixed nominal coupon. ► Corporate default decisions depend on monetary policy through its impact on expected inflation. ► Deadweight bankruptcy costs provide an important role for monetary policy. ► A debt-deflationary spiral results when there are real costs of financial distress.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Authors
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