This paper examines the role of the monetary instrument choice for local equilibrium determinacy under sticky prices and different fiscal policy regimes. Corresponding to Benhabib et al.’s (2001) results for interest rate feedback rules, the money growth rate should not rise by more than one for one with inflation when the primary surplus is raised with public debt. Under an exogenous primary s...

Financial theory creates a puzzle. Some authors argue that high-risk entrepreneurs choose debt contracts instead of equity contracts since risky but high returns are of relatively more value for a loan-financed firm. On the contrary, authors who focus explicitly on start-up finance predict that entrepreneurs are the more likely to seek equity-like venture capital contracts, the more risky their...

Iraqi loans stood out because of their unique characteristics. The international blockade in 1991, the occupation 2003, and actions puppet administrations were among many events that contributed to this debt, with first two being most significant. corruption faces. Due these policies, Iraq is currently undergoing debt restructuring under supervision guidelines IMF. goal research was examine cau...

The Authors present the main activities and results of a Project financed by the Italian-Egyptian Debt Swap Agreement (IEDDS/DS) of the Italian Development Cooperation to repay public debt. The Health Governance Project operated within the Egyptian health reform paradigm and aimed at producing evidence for policy makers to direct and reorient the health sector and service management. It develop...

T paper has two objectives. First, we show how debt financing distorts a retailer’s inventory decision when the retailer orders multiple items that differ in cost, revenue, or demand parameters. Taking advantage of limited liability, a debt-financed retailer favors items with a low salvage value, those with a high profit margin, and those that represent a large proportion of the total inventory...

The research method uses quantitative descriptive in assessing the financial performance of PT Karya Indo Selera for 2016-2020 period. results showed that net profit margin at company can be seen company's is not a good condition, because it still below average standard. Return on assets poor average. equity current ratio Quick condition. Debt to asset condition value this above industry This m...

In his basic model of debt renegotiation, BESTER [1994] argues that collateral is more effective if high risk projects are financed. This result, however, crucially depends on the definition of risk. Using the second-order stochastic dominance criterion introduced by ROTHSCHILD AND STIGLITZ [1970], we show that it is not a project’s high risk, induced by a high probability of default, that make...

This paper studies the valuation of credit risk for firms that own several subsidiaries or business lines. We provide simple analytical approximating expressions for probabilities of default, and for equity-debt market values, both in the case when the information is available in continuous time as well as in the case that it is not instantaneously available. The total firm’s asset value being ...

This paper reports the results of an experiment designed to test for the presence of debt aversion. The population who participated in the experiment were recent financial aid candidates and the experiment focused on student loans. The goal is to shed new light on different aspects of the perceptions with respect to debt. These perceptions can prevent agents from choosing an optimal portfolio o...

I develop a novel link between frictions in international financial markets and fiscal procyclicality. Complementing existing evidence, A decomposition of government expenditure into social spending and public good spending reveals that the cyclical correlation of social spending exhibits the biggest differences across countries. I build a small open economy model with income inequality, endoge...