search query: @author Bertocchi, G. / total: 4
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| Author: | Bertocchi, G. |
| Title: | Safe debt, risky capital |
| Journal: | Economica
1994 : NOV, VOL. 61:244, p. 493-508 |
| Index terms: | DEBT CAPITAL RISK |
| Language: | eng |
| Abstract: | The author extends the Diamond model of national debt in two directions. He introduces technological uncertainty, and allows the stock of debt to vary. He studies the dynamical equilibria of the resulting stochastic system and establishes conditions for the existence of stationary states which are expressed in terms of invariant distributions. Since conditions that ensure the existence of a stochastic stationary state with positive debt are very restrictive, in this model financial instability is a pervasive phenomenon and allocations are in general dynamically inefficient. |
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