Investment and liquidation in renegotiation-proof contracts with moral hazard

• 成果类型: Article
• 署名作者: Quadrini, V
• 署名单位: University of Southern California; New York University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2003.08.014
• 发表日期: 2004
• 页码: 713-751
• 关键词: financial contract; Finn investment; liquidation; renegotiation-proof

摘要

In a long-term contract with moral hazard, the liquidation of the firm can arise Lis the outcome of the optimal contract. However, if the future production capability or market opportunities remain unchanged, liquidation may not be Free from renegotiation. Will the firm ever be liquidated if we allow for renegotiation? This paper shows that the firm can still be liquidated even though liquidation is not free from renegotiation in the long-term contract. In addition to liquidation, the renegotiation-proof contract generates important features of the investment behavior and dynamics of firms observed in the data. (C) 2003 Elsevier B.V. All rights reserved.