Theories on Credit Market, Credit Risk and Economic Activity
This chapter has employed perfect and imperfect capital market theory and discussed the relation of creditmarket borrowing, credit risk, asset prices and economic activity. We also have shown how in a simple model of the firm the micro-macro link may work. In the next chapter we want to pursue the question of how to empirically test for credit risk of economic agents and its impact on economic activity.
KeywordsInterest Rate Discount Rate Capital Market Asset Price Credit Risk
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