On the dynamic capital structure of nations: Theory and empirics

Ni Y., Barth J. R., Sun Y.

Research in International Business and Finance, cilt.62, 2022 (SSCI) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 62
  • Basım Tarihi: 2022
  • Doi Numarası: 10.1016/j.ribaf.2022.101725
  • Dergi Adı: Research in International Business and Finance
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus, EconLit
  • Anahtar Kelimeler: Dynamic capital structure, Stochastic model, Inflation risk, Default risk
  • TED Üniversitesi Adresli: Hayır

Özet

© 2022 Elsevier B.V.We develop a dynamic model of the optimal capital structure of a nation from a corporate finance perspective. A stochastic model is developed to determine the optimal combination of fiat money, domestic-currency debt, and foreign-currency debt for a nation to fund economic growth and development. We then test the implications of the model based on an analysis of data for 22 emerging economies. Consistent with the theoretical model, our findings indicate that the combination of money and debt depends on the trade-off between the inflation risk of fiat money and domestic-currency debt, and the default risk of foreign-currency debt.