CHAPTER 12The Price of Stability Is Pathology: Thoughts on Some Default Intervals
Hat tip: Kay Giesecke, Francis A. Longstaff, Stephen Schaefer, Ilya Strebulaev, “Corporate Bond Default Risk: A 150-Year Perspective”1
The authors of the paper referenced above focus on structural model building and dynamics and attempt to explain the business cycle through default rates. They largely skirt around the issue of whether corporate bond defaults going back to the Civil War are relevant to current financial research at all. Have times changed so much that the differences outweigh the similarities?
The authors do attempt somewhat of an answer in two ways:
1. “[W]hile the names of the bond issuers and the industries they represent may change and evolve ...
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