The macroeconomic effects of default and debt restructuring: An agent based exploration
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https://doi.org/10.1016/j.iref.2021.08.003 |
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Título
The macroeconomic effects of default and debt restructuring: An agent based explorationFecha de publicación
2021-08-20Editor
ElsevierISSN
1059-0560Cita bibliográfica
TEDESCHI, Gabriele, et al. The macroeconomic effects of default and debt restructuring: An agent based exploration. International Review of Economics & Finance, 2021, vol. 76, p. 1146-1163.Tipo de documento
info:eu-repo/semantics/articleVersión de la editorial
https://www.sciencedirect.com/journal/international-review-of-economics-and-financeVersión
info:eu-repo/semantics/publishedVersionPalabras clave / Materias
Resumen
In this paper we investigate the economic impact of bank reactions to firm financial delinquency. In case of firm liquidity shortage, indeed, the bank commonly proposes two different solutions of debt restructuring ... [+]
In this paper we investigate the economic impact of bank reactions to firm financial delinquency. In case of firm liquidity shortage, indeed, the bank commonly proposes two different solutions of debt restructuring to help large firms to recover from their financial distress situation. One option is the debt rescheduling: the bank agrees to an extension of the debt maturity, i.e., to be repaid in the following time periods. The other one is the debt relief: the bank agrees to renegotiate the terms of the debt contract, i.e, to apply a discount rate on the firm past and present debt. We find that higher bank tolerance and debt discount correspond to higher average GDP level, growth rate and volatility. Moreover, the number of recessions decreases while their duration increases. Finally, we perform a monetary policy exercise, finding that an expansionary policy coupled with higher bank tolerance would be very beneficial to the economy. [-]
Publicado en
International Review of Economics & Finance Volume 76, November 2021, Pages 1146-1163Entidad financiadora
Ministerio de Ciencia, Innovación y Universidades (Spain) | Universitat Jaume I
Código del proyecto o subvención
RTI2018-096927-B-100 | UJI-B2018-77
Derechos de acceso
1059-0560/© 2021 Elsevier Inc. All rights reserved
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