In an economy with a debt overhang, investment depends on expected tax rates. On the other hand, expected tax rates depend on the debt’s face value. Therefore

When lenders participate voluntarily in a buyback of debt claims, both the price paid for repurchased claims and the secondary market price of the remaining deb

In an economy with a debt overhang, investment depends on expected tax rates. On the other hand, expected tax rates depend on the debt's face value. Therefore i

Debt reduction poses collective action problems that cannot be efficiently handled in the framework of voluntary market-based approaches. Instead we need concer