We propose a restructuring of U. S. Federal debt. All debt should be perpetual, paying coupons forever with no principal. The debt should be composed of the following: 1) Fixedvalue, floating-rate, electronically transferable debt. Such debt looks like a money-market fund, or reserves at the Fed, to an investor. 2) Nominal perpetuities. This debt pays a coupon of $1 per bond, forever. 3) Indexe...

The aim of this paper is to use copulas functions to capture the different structures of dependency when we deal with portfolios of dependent credit risks and a basket of credit derivatives. We first present the wellknown result for the pricing of default risk, when there is only one defaultable firm. After that, we expose the structure of dependency with copulas in pricing dependent credit der...

We postulate a new method of measuring debt which we call the debt burden (DB). We claim that DB reveals the true debt obligations of the fiscal authority by taking the intertemporal debt obligations of the government into account. It is more accurate and more transparent than the currently used methods of assessing debt. DB is calculated on a daily basis and it clearly identifies debt risks. I...

Modelling the dynamics of credit derivatives is a challenging task in finance and economics. The recent crisis has shown that the standard market models fail to measure and forecast financial risks and their characteristics. This work studies risk of collateralized debt obligations (CDOs) by investigating the evolution of tranche spread surfaces and base correlation surfaces using a dynamic sem...

We develop a political-economic model of sovereign debt that shows that income inequality leads to popular pressures on the government to use foreign debt to Þnance a redistribution of income at the expense of productive public investment. Recognizing this fact international lenders impose credit ceilings with the consequence that developing country borrowers invest less and grow slower. ∗We ar...

Most American households carry debt, yet we have little understanding of how debt influences health behavior, especially health care seeking. We examined associations between foregone medical care and debt using a population-based sample of 914 southeastern Michigan residents surveyed in the wake of the late-2000s recession. Overall debt and ratios of debt to income and debt to assets were posi...

Pekka Malo Department of Information and Service Economy, Aalto University School of Business P.O. Box 21210, FI-00076 AALTO, FINLAND Corresponding author, e-mail:[email protected] tel:+358 40 353 8071, fax: +358 9 431 38535 Ankur Sinha Department of Information and Service Economy, Aalto University School of Business P.O. Box 21210, FI-00076 AALTO, FINLAND e-mail: [email protected] tel:+3...