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incentives of US managers to adopt riskier business policies. Specifically, based on the agency problems between shareholders and … managers and between shareholders and creditors, a research framework is developed to identify the influence of low interest … rates on managers’ risk-taking incentives proxied by the sensitivity of executive compensation to stock return volatility …
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We examine "Forward Guidance Contracts", which make central bankers' utility contingent on the precision of interest-rate forecasts for some time. Such Forward Guidance Contracts are a exible commitment device and can improve economic performance when the economy is stuck in a liquidity trap....
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