Abstract
This essay analyzes how nominal debt commitments and default incidence interact in the determination of output. It specifies an environment in which concern about the deflationary impact of recessions is well-founded. It is shown that feedback exists between real and monetary shocks, microeconomic outcomes, and macroeconomic performance. The mechanisms for this feedback are the contractual relationships between agents, the state of bankruptcy, and financial intermediaries who disseminate dead-weight default costs to the macroeconomy.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
