The Costs of Corporate Debt Overhang

2020 ◽  
Author(s):  
Kristian Blickle ◽  
João A. C. Santos
Keyword(s):  
Corporate Debt ◽  
Debt Overhang

Corporate Debt Overhang and Credit Policy

2020 ◽  
Vol 2020 (2) ◽  
pp. 447-502
Author(s):  
Markus Brunnermeier ◽  
Arvind Krishnamurthy
Keyword(s):  
Corporate Debt ◽  
Credit Policy ◽  
Debt Overhang

Sticky Leverage

2016 ◽  
Vol 106 (12) ◽  
pp. 3800-3828 ◽  
Author(s):  
João Gomes ◽  
Urban Jermann ◽  
Lukas Schmid
Keyword(s):  
Interest Rate ◽  
General Equilibrium ◽  
Equilibrium Model ◽  
Debt Maturity ◽  
General Equilibrium Model ◽  
Corporate Debt ◽  
Debt Overhang ◽  
The Real ◽  
Unanticipated Inflation

We develop a tractable general equilibrium model that captures the interplay between nominal long-term corporate debt, inflation, and real aggregates. We show that unanticipated inflation changes the real burden of debt and, more significantly, leads to a debt overhang that distorts future investment and production decisions. For these effects to be both large and very persistent, it is essential that debt maturity exceeds one period. We also show that interest rate rules can help stabilize our economy. (JEL E12, E31, E44, E52, G01, G32, G35)

scholarly journals Zombies at Large? Corporate Debt Overhang and the Macroeconomy

2020 ◽  
Author(s):  
Òscar Jordà ◽  
Martin Kornejew ◽  
Moritz Schularick ◽  
Alan M. Taylor
Keyword(s):  
Corporate Debt ◽  
Debt Overhang

scholarly journals Zombies at Large? Corporate Debt Overhang and the Macroeconomy

2020 ◽  
Author(s):  
Òscar Jordà ◽  
Martin Kornejew ◽  
Moritz Schularick ◽  
Alan Taylor
Keyword(s):  
Corporate Debt ◽  
Debt Overhang

scholarly journals Zombies at Large? Corporate Debt Overhang and the Macroeconomy

2021 ◽  
Author(s):  
Òscar Jordà ◽  
◽  
Martin Kornejew ◽  
Moritz Schularick ◽  
Alan Taylor ◽  
...  
Keyword(s):  
Corporate Bonds ◽  
Bank Loans ◽  
Corporate Debt ◽  
Legal Tradition ◽  
Debt Overhang ◽  
Credit Booms ◽  
Debt Renegotiation ◽  
The Past ◽  
Advanced Economies ◽  
Household Credit

What are the macroeconomic consequences of business credit booms? Are they as dangerous as household credit booms? If not, why not? We answer these questions by collecting data on nonfinancial business liabilities (primarily bank loans and corporate bonds) for 17 advanced economies over the past 150 years. Unlike household credit, business credit booms are rarely followed by macroeconomic hangovers. Data on debt renegotiation costs—instrumented by a country’s legal tradition—show that frictions to debt resolution make recessions deeper and longer—an important factor in explaining the differences with household credit booms.

scholarly journals Zombies at Large? Corporate Debt Overhang and the Macroeconomy

2020 ◽  
Author(s):  
Òscar Jordà ◽  
Martin Gunter Michail Kornejew ◽  
Moritz Schularick ◽  
Alan M. Taylor
Keyword(s):  
Corporate Debt ◽  
Debt Overhang

scholarly journals Zombies at Large? Corporate Debt Overhang and the Macroeconomy

2020 ◽  
pp. 1.000-46.000
Author(s):  
Òscar Jordà ◽  
◽  
Martin Kornejew ◽  
Moritz Schularick ◽  
Alan M. Taylor ◽  
...  
Keyword(s):  
Business Cycles ◽  
Financial Distress ◽  
Corporate Debt ◽  
Economic Costs ◽  
Debt Overhang ◽  
Credit Booms ◽  
Long Run ◽  
Modern Business ◽  
Cross Country ◽  
Local Projections

With business leverage at record levels, the effects of corporate debt overhang on growth and investment have become a prominent concern. In this paper, we study the effects of corporate debt overhang based on long-run cross-country data covering the near universe modern business cycles. We show that business credit booms typically do not leave a lasting imprint on the macroeconomy. Quantile local projections indicate that business credit booms do not affect the economy’s tail risks either. Yet in line with theory, we find that the economic costs of corporate debt booms rise when inefficient debt restructuring and liquidation impede the resolution of corporate financial distress and make it more likely that corporate zombies creep along.

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