Firm Financing over the Business Cycle
... (2011) document that large public rms substitute between debt- and equity nancing over the business cycle whereas small rms' nancing policy is pro-cyclical for debt and equity. Based on our denition, the vast majority of rms, that is at least 75 percent of the Compustat universe, classify as s ...
... (2011) document that large public rms substitute between debt- and equity nancing over the business cycle whereas small rms' nancing policy is pro-cyclical for debt and equity. Based on our denition, the vast majority of rms, that is at least 75 percent of the Compustat universe, classify as s ...
Lao People`s Democratic Republic: 2014 Article IV Consultation
... The external position remains highly vulnerable, and international reserves do not offer adequate protection against external shocks (Box 2). The current account deficit is expected to remain large at 25 percent of GDP in 2014, with improvement in the nonresource current account balance, consequent ...
... The external position remains highly vulnerable, and international reserves do not offer adequate protection against external shocks (Box 2). The current account deficit is expected to remain large at 25 percent of GDP in 2014, with improvement in the nonresource current account balance, consequent ...
The Eurozone Crisis
... “talk of further state control of U.K. and U.S. banks.” It went on to say:6 “Bank shares fell heavily in the U.S. and Europe yesterday on fears that more big lenders would have to ask for state help. Speculation mounted that Bank of America and Citigroup could be fully nationalised. In the U.K., whe ...
... “talk of further state control of U.K. and U.S. banks.” It went on to say:6 “Bank shares fell heavily in the U.S. and Europe yesterday on fears that more big lenders would have to ask for state help. Speculation mounted that Bank of America and Citigroup could be fully nationalised. In the U.K., whe ...
Chapter 11
... It has often been said that if the company can't earn a rate of return greater than the cost of capital it should not make investments. Explain. If the firm cannot earn the overall cost of financing on a given project, the investment will have a negative impact on the firm's operations and will lowe ...
... It has often been said that if the company can't earn a rate of return greater than the cost of capital it should not make investments. Explain. If the firm cannot earn the overall cost of financing on a given project, the investment will have a negative impact on the firm's operations and will lowe ...
How Likely is Hyperinflation in the US? Part One
... Michael K. Salemi, economics professor at University of North Carolina at Chapel Hill, high debt, rising interest rates and monetization caused the Latin American high inflation of the 1980's. By some measures, Iran may have begun experiencing hyperinflation by October of 2012, when at least one sou ...
... Michael K. Salemi, economics professor at University of North Carolina at Chapel Hill, high debt, rising interest rates and monetization caused the Latin American high inflation of the 1980's. By some measures, Iran may have begun experiencing hyperinflation by October of 2012, when at least one sou ...
Defaultable Debt, Interest Rates and the Current Account
... the level of output and the stochastic trend for Canada relative to Mexico. As suggested by the picture the trend is far less stable in the case of Argentina as compared to Canada.3 ...
... the level of output and the stochastic trend for Canada relative to Mexico. As suggested by the picture the trend is far less stable in the case of Argentina as compared to Canada.3 ...
presentation slides
... Figure 14. This figure depicts the lending relationships examined in the model. A foreign bank branch lends to local borrowers in dollars and finances its lending from the wholesale dollar funding market. ...
... Figure 14. This figure depicts the lending relationships examined in the model. A foreign bank branch lends to local borrowers in dollars and finances its lending from the wholesale dollar funding market. ...
full text pdf
... rules to curb tax-driven debt financing that leads to interest deductions being excessive from point of view of tax authorities, and to protect their corporate tax bases.² The OECD encourages such implementations in its recent action plan against base erosion and profit shifting (OECD (2013, action ...
... rules to curb tax-driven debt financing that leads to interest deductions being excessive from point of view of tax authorities, and to protect their corporate tax bases.² The OECD encourages such implementations in its recent action plan against base erosion and profit shifting (OECD (2013, action ...
Working Paper 17-6: Does Greece Need More Official Debt Relief? If
... At the same time, they think that it is possible to restore debt sustainability by combining reforms and fiscal adjustment with the “medium and long term” debt relief measures sketched by the Eurogroup in May 2016. These include the “re-profiling of the EFSF amortization as well as capping and defer ...
... At the same time, they think that it is possible to restore debt sustainability by combining reforms and fiscal adjustment with the “medium and long term” debt relief measures sketched by the Eurogroup in May 2016. These include the “re-profiling of the EFSF amortization as well as capping and defer ...
The Role of the IMF in Debt Restructurings: L I A , Moral Hazard and
... of access limits to IMF lending has not generated an observable change in practice. The institution may be trying to achieve an almost impossible objective: imposing more stringent criteria to constrain its intervention capacity without recognizing that such an approach is ultimately inconsistent wi ...
... of access limits to IMF lending has not generated an observable change in practice. The institution may be trying to achieve an almost impossible objective: imposing more stringent criteria to constrain its intervention capacity without recognizing that such an approach is ultimately inconsistent wi ...
"Household Debt and Business Cycles Worldwide"
... fiscal policy constraints. Moreover, households may not internalize the effect of their individual borrowing decision, making the economy at times susceptible to “excessive” credit growth.1 However, empirical evidence on increases in household debt and subsequent economic performance is largely limi ...
... fiscal policy constraints. Moreover, households may not internalize the effect of their individual borrowing decision, making the economy at times susceptible to “excessive” credit growth.1 However, empirical evidence on increases in household debt and subsequent economic performance is largely limi ...
Household Debt and Business Cycles Worldwide
... fiscal policy constraints. Moreover, households may not internalize the effect of their individual borrowing decision, making the economy at times susceptible to “excessive” credit growth.1 However, empirical evidence on increases in household debt and subsequent economic performance is largely limi ...
... fiscal policy constraints. Moreover, households may not internalize the effect of their individual borrowing decision, making the economy at times susceptible to “excessive” credit growth.1 However, empirical evidence on increases in household debt and subsequent economic performance is largely limi ...
diluting - McGraw Hill Higher Education
... • Convertible bonds also allow young firms to delay expensive interest costs until they can afford them. • Support for these assertions is found in the fact that firms that issue convertible bonds are different from other firms: – The bond ratings of firms using convertibles are lower. – Convertible ...
... • Convertible bonds also allow young firms to delay expensive interest costs until they can afford them. • Support for these assertions is found in the fact that firms that issue convertible bonds are different from other firms: – The bond ratings of firms using convertibles are lower. – Convertible ...
Chapter 11
... It has often been said that if the company can't earn a rate of return greater than the cost of capital it should not make investments. Explain. If the firm cannot earn the overall cost of financing on a given project, the investment will have a negative impact on the firm's operations and will lowe ...
... It has often been said that if the company can't earn a rate of return greater than the cost of capital it should not make investments. Explain. If the firm cannot earn the overall cost of financing on a given project, the investment will have a negative impact on the firm's operations and will lowe ...
NBER WORKING PAPER SERIES Mark Aguiar Gita Gopinath
... a large effect on the cost of debt. Agents therefore typically do not borrow to the point where default is probable. On the other hand, a shock to trend growth has a large impact on the two value functions (because of the shock’s persistence) and on the difference between the two value functions. The ...
... a large effect on the cost of debt. Agents therefore typically do not borrow to the point where default is probable. On the other hand, a shock to trend growth has a large impact on the two value functions (because of the shock’s persistence) and on the difference between the two value functions. The ...
FX-Adjusted Local Currency Spreads CEME
... Fundamental variables account for very little of the observed variation in exchange rates for developed countries’ currencies over short-time horizons up to one year.6 Dealers’ order flows rather than economic fundamentals are the dominant drivers of exchange rates [Lyons, 2001]. While order flows m ...
... Fundamental variables account for very little of the observed variation in exchange rates for developed countries’ currencies over short-time horizons up to one year.6 Dealers’ order flows rather than economic fundamentals are the dominant drivers of exchange rates [Lyons, 2001]. While order flows m ...
Defaultable Debt, Interest Rates, and the Current Account
... and Kehoe and Perri (2002). A point to note is that we are able to generate positive co‐ movement between interest rates and the current account without recourse to any external shocks. It is sometimes conjectured that the reason borrowing is higher in good times (counter to risk‐sharing predictio ...
... and Kehoe and Perri (2002). A point to note is that we are able to generate positive co‐ movement between interest rates and the current account without recourse to any external shocks. It is sometimes conjectured that the reason borrowing is higher in good times (counter to risk‐sharing predictio ...
Inflation vs Deflation
... We acknowledge that there is high uncertainty about whether it will be inflation or deflation that will dominate in the future. But, in the end, the return of inflation is more likely, though not before 2012 at the earliest, as the recession is still working through. First, the scarcity of natural r ...
... We acknowledge that there is high uncertainty about whether it will be inflation or deflation that will dominate in the future. But, in the end, the return of inflation is more likely, though not before 2012 at the earliest, as the recession is still working through. First, the scarcity of natural r ...
FM11 Ch 14 Instructors Manual
... intensity ratio increases, and (5) SEC begins paying its suppliers sooner. (Consider each item separately and hold all other things constant.) ...
... intensity ratio increases, and (5) SEC begins paying its suppliers sooner. (Consider each item separately and hold all other things constant.) ...
accounting for long-term assets, long
... depreciating non-production-related assets. Recall our responses to the four questions: 1. Should an asset be recognized? Generally, we would expect future benefits to be created when a company uses non-production-related assets. For example, we would expect future benefits to be realized when sale ...
... depreciating non-production-related assets. Recall our responses to the four questions: 1. Should an asset be recognized? Generally, we would expect future benefits to be created when a company uses non-production-related assets. For example, we would expect future benefits to be realized when sale ...
Contagion of Sovereign Default Risk: the Role of Two Financial
... The interaction of credit conditions for sovereign borrowers and lenders associated with the two financial frictions is a key mechanism for contagion of sovereign default in the model. Contagion occurs in the following way. Suppose that a bad income shock hits a country (Greece), which leads to an ...
... The interaction of credit conditions for sovereign borrowers and lenders associated with the two financial frictions is a key mechanism for contagion of sovereign default in the model. Contagion occurs in the following way. Suppose that a bad income shock hits a country (Greece), which leads to an ...
05. The Impact of Expense Shocks on the Financial Distress of
... for bankruptcy. Credit card issuers and credit score reporting agencies also studied this problem with their in-house data on customers’ credit history, income, employment status, length of employment, and home-ownership. Similarly, Gross and Souleles (2002) studied unsecured credit lines of delinqu ...
... for bankruptcy. Credit card issuers and credit score reporting agencies also studied this problem with their in-house data on customers’ credit history, income, employment status, length of employment, and home-ownership. Similarly, Gross and Souleles (2002) studied unsecured credit lines of delinqu ...
Chapter 16 -- Operating and Financial Leverage
... Make an examination of the coverage ratios for Basket Wonders when EBIT=$500,000. Compare the equity and the debt financing alternatives. ...
... Make an examination of the coverage ratios for Basket Wonders when EBIT=$500,000. Compare the equity and the debt financing alternatives. ...
Monetary Policy with Interest on Reserves
... People have objected to Friedman’s proposal, that prices and wages might be sticky so perpetual deflation might not be a good thing. Moreover, living at the zero lower bound means the Fed does not have the power to lower real rates in response to various shocks. But if we had interest-paying money, ...
... People have objected to Friedman’s proposal, that prices and wages might be sticky so perpetual deflation might not be a good thing. Moreover, living at the zero lower bound means the Fed does not have the power to lower real rates in response to various shocks. But if we had interest-paying money, ...
NBER WORKING PAPER SERIES FINANCIAL GLOBALIZATION, FINANCIAL CRISES, AND THE EXTERNAL
... a very small decline in equity holdings and a large increase in debt. The transitional dynamics at work in the model operate as follows: Upon opening the nancial account of the emerging economy, a fall in the real interest rate and the desire to smooth consumption induce agents to borrow from abroa ...
... a very small decline in equity holdings and a large increase in debt. The transitional dynamics at work in the model operate as follows: Upon opening the nancial account of the emerging economy, a fall in the real interest rate and the desire to smooth consumption induce agents to borrow from abroa ...
Government debt
Government debt (also known as public debt, national debt and sovereign debt) is the debt owed by a central government. (In federal states, ""government debt"" may also refer to the debt of a state or provincial, municipal or local government.) By contrast, the annual ""government deficit"" refers to the difference between government receipts and spending in a single year, that is, the increase of debt over a particular year.Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. But this practice simply reduces government interest costs rather than truly canceling government debt, and can result in hyperinflation if used unsparingly.Governments usually borrow by issuing securities, government bonds and bills. Less creditworthy countries sometimes borrow directly from a supranational organization (e.g. the World Bank) or international financial institutions.As the government draws its income from much of the population, government debt is an indirect debt of the taxpayers. Government debt can be categorized as internal debt (owed to lenders within the country) and external debt (owed to foreign lenders). Another common division of government debt is by duration until repayment is due. Short term debt is generally considered to be for one year or less, long term is for more than ten years. Medium term debt falls between these two boundaries. A broader definition of government debt may consider all government liabilities, including future pension payments and payments for goods and services the government has contracted but not yet paid.