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We model the expansion decision of a levered firm. Straight debt distorts both timing and scaling: the firm invests … less and later than its all-equity financed counterpart. The inclusion of performance sensitivity in the debt contract …-off theory of capital structure. As a result, our model rationalizes the widespread use of performance sensitive debt (PSD …
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This paper reviews the patterns of sectoral debts and growth and the mechanisms explaining the adverse effects of debt … growth is more sensitive to rising household debt than corporate debt. However, these effects are highly heterogenous across …
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