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We develop and estimate a general (S, s) model of capital structure to investigate the relation between target leverage, refinancing thresholds, and firm characteristics in a dynamic environment. We find that firms' target leverage is pro-cyclical, consistent with dynamic capital structure...
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This paper shows that the risk of devaluation can be an important factor accounting for the stylized facts of exchange … tax induces endogenous state-contingent wealth effects via fiscal adjustment and suboptimal investment. Devaluation risk …
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interesting interpretations of available empirical evidence. We also specify how to infer devaluation risk from target zone data …
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