Does wage rigidity make firms riskier? Evidence from long-horizon return predictability
In: Journal of Monetary Economics, Band 78, S. 80-95
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In: Journal of Monetary Economics, Band 78, S. 80-95
In: Journal of Monetary Economics, Band 60, Heft 6, S. 737-751
In: Journal of Monetary Economics, Band 60, Heft 3, S. 351-366
In: NBER Working Paper No. w17285
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In: Journal of political economy, Band 132, Heft 2, S. 577-615
ISSN: 1537-534X
In: Fisher College of Business Working Paper No. 2017-03-30
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Working paper
In: Journal of Monetary Economics, Band 115, S. 145-161
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: Charles A. Dice Center Working Paper No. 2014-15
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In: Charles A. Dice Center Working Paper No. 2014-08
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In: Journal of political economy, Band 122, Heft 1, S. 129-177
ISSN: 1537-534X
In: NBER Working Paper No. w20210
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In: University of Connecticut School of Business Research Paper No. 22-22
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