A macroeconomic model of bankruptcy

Tamborini, Roberto (1997) A macroeconomic model of bankruptcy. UNSPECIFIED. (Unpublished)

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    This paper relates to the macroeconomics of imperfect capital markets. In this framework, the heterogeneity of agents, notably of borrowing firms, is a key element in the explanation of interactions between financial intermediaries and borrowers facing a bankruptcy probability. This probability is usually introduced through exogenous stochastic factors in firms' revenue. In this paper I pursue a more inherently informational approach which, even though all market processes are deterministic, partly "endogenizes" the default probability as a consequence of heterogeneous, privately-held price expectations across firms. Then I examine in detail the credit transmission mechanism and its impact on the macroeconomic variables in an economy with characteristics such as those in 1) to 5).

    Item Type: Departmental Technical Report
    Department or Research center: CEEL (Computable and Experimental Economics Laboratory)
    Subjects: H Social Sciences > HG Finance
    Uncontrolled Keywords: Macroeconomics - Imperfect capital markets - Credit and money
    Report Number: 2
    Repository staff approval on: 19 Jan 2011

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