This paper studies optimal monetary policy under dynamic debt deleveraging once the zero bound is binding. Unlike the …

and borrowers ample reason to care whether nonperforming debts are restructured. One implication of the way in which debt … argument is moral hazard, but (unlike in much of the recent literature of emerging market debt problems) what is central here …

We analyze government interventions to alleviate debt overhang among banks. Interventions generate two types of rents …

Fire sales are forced sales of assets in which high-valuation bidders are sidelined, typically due to debt overhang …

Government guarantees of private debt deplete equity. The depletion is greatest during periods when the probability of … debt up to the limit the government permits. Declines in asset values raise debt in relation to asset values and thus … asset values to market. Less widely recognized is that guaranteed debt creates an incentive to pay equity out to owners …