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Debt in Industry Equilibrium
This article shows (1) how entry and exit of firms in a competitive industry affect the valuation of securities and optimal capital structure, and (2) how, given a trade-off between tax advantagesExpand
Exchange Rate Targets and Currency Bands
Research programmes in economics usually emerge from the intersection between a new analytical approach and a real economic problem. In the last few years, such a programme has emerged inExpand
Costs and Benefits of an Anti-Inflationary Policy: Questions and Issues
This paper analyses how the output or unemployment cost of achieving a sustainable reduction in the rate of inflation depends on the structure of the wage-price process and how the "sacrifice ratio"Expand
Leverage and Asset Bubbles: Averting Armageddon with Chapter 11?
An iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to ‘overshoot’ equilibrium when an asset bubble bursts –Expand
Why Have a Target Zone
The desire to avoid speculative runs on currencies appears to be one of the main reasons leading policy-makers to impose currency bands, but the standard analysis of target zones rules out anyExpand
Exchange Rate Bands With Price Inertia
We formulate a stochastic rational-expectations model of exchange rate determination in which there are random shocks to the process of sluggish price adjustment. We examine the effects of imposingExpand
Liquidity when it matters: QE and Tobin’s q
The model of credit-constrained investors developed by Kiyotaki and Moore is used to analyse 'unconventional monetary policy' actions taken in the US and UK. We make two contributions. The first isExpand
Asset Bubbles, Domino Effects and 'Lifeboats' Elements of the East Asian Crisis
Credit market imperfections have been blamed for the depth and persistence of the Great Depression in the USA. Could similar mechanisms have played a role in ending the East Asian miracle? After aExpand