Credit Default Swaps in General Equilibrium: Endogenous Default and Credit‐Spread Spillovers

RM Darst, E Refayet - Journal of Money, Credit and Banking, 2018 - Wiley Online Library
This paper shows that credit default swaps (CDS) can affect the type of debt firms issue.
Firms face a trade‐off between investment scale and the cost of capital measured by the …