Comment on: "Phasing out the GSEs" by Vadim Elenev, Tim Landvoigt, and Stijn Van Nieuwerburgh
In: Journal of Monetary Economics, Band 81, S. 133-135
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In: Journal of Monetary Economics, Band 81, S. 133-135
In: Journal of Monetary Economics, Band 78, S. 80-95
In: Journal of Monetary Economics, Band 60, Heft 6, S. 737-751
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In: Journal of Finance, Forthcoming
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In: American economic review, Band 110, Heft 6, S. 1673-1712
ISSN: 1944-7981
We show that labor market frictions are first-order for understanding credit markets. Wage growth and labor share forecast aggregate credit spreads and debt growth as well as or better than alternative predictors. They also predict credit risk and debt growth in a cross section of international firms. Finally, high labor share firms choose lower financial leverage. A model with labor market frictions and risky long-term debt can explain these findings, and produce large credit spreads despite realistically low default probabilities. This is because precommitted payments to labor make other committed payments (i.e., interest) riskier. (JEL D33, E23, E24, E25, E44, F23, G32)
In: CEPR Discussion Paper No. DP12283
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In: 2021 AFA Annual Meeting
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In: Columbia Business School Research Paper No. 18-77
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In: Journal of political economy, Band 125, Heft 1, S. 140-223
ISSN: 1537-534X