between generalized financial crises on the one hand and isolated bank failures, debt defaults and foreign-exchange market … disturbances on the other. We represent this distinction in three sets of linkages: between debt defaults and bank failures …; between exchange-market disturbances and debt defaults; and between exchange-market disturbances and bank failures. In both …

, economies of scale, and have been heavily protected from international competition in Portugal and Spain. The `costs of non …

costs across the euro area. The example of Cyprus is discussed, where political decisions resulted in a transfer of about …

(especially in Greece), bad choices with regards to public finances, weak corporate governance within the local banking sector …

state and regulators are not necessarily independent. Among other things, we show that firms invest more, issue more debt …

leveraged banks’ precautionary demand for liquidity. When adverse asset shocks materialize, a bank’s ability to roll over debt …

further loans to help service the debt. Since deposits are mainly short-term and loans are long-term, the short-run demand for …

I analyze how lack of commitment affects the maturity structure of sovereign debt. Governments balance benefits of …-term debt affects default and rollover decisions by subsequent policy makers. The equilibrium maturity structure is shaped by … revenue losses on inframarginal units of debt that reflect the price impact of these decisions. The model predicts an interior …

aggressive', in which case they accept negative-NPV projects. In the first case, the uniquely optimal security is debt. In the … second case, it is levered equity. Debt maximizes lenders’ payoffs from financing low-NPV projects, i.e., projects that have … that are relatively likely to break even are financed with debt, while less profitable projects are financed with equity …