Corporate-debt overhang and macroeconomic expectations

Article Abstract:

A model where corporate debt overhang generates multiple equilibria in which expectations influence economic activity is presented. In this model, debt overhang is created when a present debt undermines new investment because the new investment's benefits will proceed to the creditors instead of the new investors. Therefore, debt overhang gives rise to a threshold value for investment returns, below which a firm cannot generate funds, thereby curtailing its ability to invest. Such threshold generates multiple equilibria in macroeconomic models where investment profitability is variable with economic conditions.

Models, Debt financing (Corporations), Debt financing, Rational expectations (Economics)

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Macroeconomic market incentive plans: history and theoretical rationale

Article Abstract:

Economists are looking for solutions other than monetary and fiscal policies to achieve high employment without inflation. Some of these solutions, such as the macroeconomic market incentive or market anti-inflation plan, change microeconomic incentives to produce different macroeconomic results. Economists can increase their understanding of MAP by becoming aware of how microeconomic price-setting behavior and transaction costs are affected by aggregate demand pressure and by realizing the macroeconomic implications of these changes.

Inflation (Finance), Inflation (Economics)

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The incentive structure of a "managed market economy": can it survive the millenium?

Article Abstract:

An analysis of the Japanese incentive structure and its role in economic development reveals that Japan needs to 'open' its economy to be able to learn new ways of financial manageent. The failure of the Japanese incentive system is apparent and an open economy will help Japanese businesses learn new wasy of managing their finance and a new trade and commercial legal orientation.

Economics, Research and Development in the Social Sciences and Humanities, Japan, Incentives (Business)

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