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Title: Essays on financial contracts and business cycles
Author: Duncan, Alfred James Michael
ISNI:       0000 0004 5920 1501
Awarding Body: University of Glasgow
Current Institution: University of Glasgow
Date of Award: 2015
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This dissertation studies the intersection between the sharing of individual specific risks and business cycle risks. Individual specific or idiosyncratic risk sharing is typically hampered by moral hazard, and in Chapter 2 we propose a new theory of debt finance as an effective mechanism for sharing idiosyncratic risks. But business cycle or systemic risk sharing is also affected by the means of idiosyncratic risk sharing. Departures from full systemic risk sharing can dampen the incentive compatibility constraint allowing a greater degree of idiosyncratic risk sharing (Chapter 1). Entrepreneurs’ productive risk can quickly transform into low employment, as wages fall below marginal revenue products of labour (Chapter 3). Market prices for systemic risk insurance do not necessarily internalise balance sheet externalities, resulting in excessive swings in leverage and factor market wedges of inefficiency (Chap- ter 4). Sometimes, agents have private information about the risks faced by their projects, and how they correlate with the broader economy. When this is the case, optimal systemic risk sharing arrangements must allocate business systemic risk in a way that deters entrepreneurs from herding among their peers (Chapter 5).
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: HB Economic Theory