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This paper describes a parsimonious macro-finance model where contracts are the mechanism by which differentially risk averse bondholders and stockholders resolve a conflict of interest problem and confront the risks associated with future investment and financing decisions of a representative...
Persistent link: https://www.econbiz.de/10012888831
In this paper I develop a model of a debt and equity financed representative firm whose production/investment decisions and financing decisions characterize business cycles. The conflict of interest problem between the differentially risk averse debt and equity investors is resolved with an...
Persistent link: https://www.econbiz.de/10012870576
This paper describes a business cycle model where financial contracting with interrelated covenants is the mechanism by which bondholders and stockholders confront the risks associated with future production-investment decisions and financing decisions of the firm and in the process resolves a...
Persistent link: https://www.econbiz.de/10013055404
This paper describes an equilibrium macro finance model where contracts are the mechanism by which differentially risk averse bondholders and stockholders resolve a conflict of interest problem and confront the risks associated with future operating decisions and financing decisions of a...
Persistent link: https://www.econbiz.de/10012986542
In this paper I develop a model that focuses attention on the financial side of business cycles. Investors in this model separate into bondholders and stockholders based on differences in risk aversion that creates a conflict of interest problem for the future management of the representative...
Persistent link: https://www.econbiz.de/10012924736