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borrowing costs
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borrowing costs
by fp3690 » Fri Oct 14, 2016 9:15 am
Hello, I have a simple problem in a small open economy setting with rising and persistent borrowing costs. I want to separate between legacy debt (before borrowing costs rose) with new debt, on which the higher new rates apply. Is there a simple way to do this through the budget constraint, without an overly complex maturity structure setup?
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Re: borrowing costs
by jpfeifer » Sun Oct 16, 2016 5:07 pm
Please provide more details. Legacy debt only makes sense if maturity is bigger than 1 period. So what do you have in mind?
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