Soyoung Lee - Latest
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Persistent Debt and Business Cycles in an Economy with Production Heterogeneity
We examine the role of debt in amplifying and propagating recessions. Firms’ debt adjustment makes recessions deeper but makes expansions gradual. In particular, when the aggregate business leverage is ten percentage points above average, the half-life of the recovery doubles. -
A Generalized Endogenous Grid Method for Default Risk Models
Models with default options are hard to solve. We propose an extension of the endogenous grid method that solves default risk models more efficiently and accurately.