Contingent Capital: The Trigger Problem

Prescott, Edward S.

Download This Paper

Open PDF in Browser

Add Paper to My Library

Contingent Capital: The Trigger Problem

FRB Richmond Economic Quarterly, vol. 98, no. 1, First Quarter 2012, pp. 33-50

18 Pages Posted: 20 Dec 2012

See all articles by Edward S. Prescott

Edward S. Prescott

Federal Reserve Banks - Federal Reserve Bank of Cleveland

There are 2 versions of this paper

Date Written: 2012

Abstract

In this article, we analyze price triggers in contingent capital bonds. We illustrate the pervasiveness of multiple equilibria and the nonexistence of equilibrium in theoretical models. We summarize evidence of these problems from market experiments and we evaluate possible solutions.

Suggested Citation: Suggested Citation

Prescott, Edward (Ned) Simpson, Contingent Capital: The Trigger Problem (2012). FRB Richmond Economic Quarterly, vol. 98, no. 1, First Quarter 2012, pp. 33-50, Available at SSRN: https://ssrn.com/abstract=2191175