Imperial College London
Portrait Picture

ProfessorPatrickBolton

Business School

Professor of Finance and Economics
 
 
 
//

Contact

 

p.bolton

 
 
//

Location

 

Business School BuildingSouth Kensington Campus

//

Summary

 

Publications

Citation

BibTex format

@article{Bolton:2018:rof/rfx042,
author = {Bolton, P and Huang, H},
doi = {rof/rfx042},
journal = {Review of Finance},
pages = {45--82},
title = {The capital structure of nations},
url = {http://dx.doi.org/10.1093/rof/rfx042},
volume = {22},
year = {2018}
}
Download

RIS format (EndNote, RefMan)

TY  - JOUR
AB  - When a nation can finance its investments via foreign-currency denominated debt or domestic-currency claims, what is the optimal capital structure of the nation? Building on the functions of fiat money as both medium of exchange, and store of value like corporate equity, our model connects monetary economics, fiscal theory, and international finance under a unified corporate finance perspective. With frictionless capital markets both a Modigliani–Miller theorem for nations and the classical quantity theory of money hold. With capital market frictions, a nation’s optimal capital structure trades off inflation dilution costs and expected default costs on foreign-currency debt. Our framing focuses on the process by which new money claims enter the economy and the potential wealth redistribution costs of inflation.
AU  - Bolton,P
AU  - Huang,H
DO  - rof/rfx042
EP  - 82
PY  - 2018///
SN  - 1382-6662
SP  - 45
TI  - The capital structure of nations
T2  - Review of Finance
UR  - http://dx.doi.org/10.1093/rof/rfx042
UR  - http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000428749500002&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=1ba7043ffcc86c417c072aa74d649202
VL  - 22
ER  -
Download