G2TT
来源类型Discussion paper
规范类型论文
来源IDDP15781
DP15781 Self-inflicted debt crises
Theodosios Sakis Dimopoulos; Norman Schürhoff
发表日期2021-02-08
出版年2021
语种英语
摘要Optimal resolution of debt crises requires bailouts to account for borrowers' time-inconsistency. We show in a dynamic model of strategic default that myopic borrowers undervalue their option to default by a U-shaped error, which causes excessive leverage, imperfect consumption smoothing, underinvestment in normal times, and risk shifting in crisis times. Optimal bailouts either punish or reward myopia through smaller or larger transfers, leading to procrastinated default and protracted crises or the reverse, depending on whether financial transfers exacerbate or alleviate the borrowers' misperception of default risk. The model shows that borrowers and lenders ultimately self-inflict debt crises through their strategic interaction, myopic distress can be cheaper to resolve than rational distress, and myopia can benefit stakeholders.
主题Financial Economics
关键词Borrower myopia Time-inconsistency Strategic default Debt crisis Bailout fund Real options
URLhttps://cepr.org/publications/dp15781
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/544781
推荐引用方式
GB/T 7714
Theodosios Sakis Dimopoulos,Norman Schürhoff. DP15781 Self-inflicted debt crises. 2021.
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