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We modify an otherwise standard medium-sized DSGE model, in order to study the macroeconomic effects of placing leverage restrictions on financial intermediaries. The financial intermediaries ('bankers') in the model must exert effort in order to earn high returns for their creditors. An agency...
Persistent link: https://www.econbiz.de/10013088686
This paper explores theoretically and empirically the link between macroeconomic risk and corporate financing policies. In a structural trade-off model of tax benefits and default costs, I introduce EBIT growth and volatility rates that depend on the business cycle. The model shows that leverage...
Persistent link: https://www.econbiz.de/10013069306
The importance of a firm's balance sheet for determining its investment and employment decisions is the central assumption of macroeconomic models of 'debt deflation' or 'debt overhang.' According to these models, firm investment decisions are influenced not only by the fundamental opportunity...
Persistent link: https://www.econbiz.de/10013247267
Persistent link: https://www.econbiz.de/10009487518
Überkapazitäten – in Verbindung mit einer von den Präferenzen der Konsumenten deutlich abweichenden Kapitalstruktur – und einer …
Persistent link: https://www.econbiz.de/10003961724
We modify an otherwise standard medium-sized DSGE model, in order to study the macroeconomic effects of placing leverage restrictions on financial intermediaries. The financial intermediaries ('bankers') in the model must exert effort in order to earn high returns for their creditors. An agency...
Persistent link: https://www.econbiz.de/10012459977
The importance of a firm's balance sheet for determining its investment and employment decisions is the central assumption of macroeconomic models of 'debt deflation' or 'debt overhang.' According to these models, firm investment decisions are influenced not only by the fundamental opportunity...
Persistent link: https://www.econbiz.de/10012474120
Persistent link: https://www.econbiz.de/10012813497
The subprime loan mortgage crisis has revived scholarly interest in Minsky's financial instability hypothesis. The related mathematical models present two types of Minskian financial structures. We construct macrodynamic models that consider both structures and discuss financial instability and...
Persistent link: https://www.econbiz.de/10013459612
Friedrich Hayek has been one of the dominating intellectual figures of the 20th century. Hayek, together with Gunnar Myrdal, received the 1974 Nobel Memorial Prize in economics, for "their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the...
Persistent link: https://www.econbiz.de/10014343108