Joachim Jungherr

Institut d'AnÓlisi Econ˛mica
Campus UAB
08193 Bellaterra (Barcelona)

About me:
I am a Post-doc Researcher at the Institut d'AnÓlisi Econ˛mica (IAE-CSIC) in Barcelona (Spain), a Research Fellow at MOVE, and an Affiliated Professor at the Barcelona Graduate School of Economics. I received my PhD from the European University Institute in Florence (Italy). A detailed CV can be found here.


Optimal Debt Maturity and Firm Investment (with Immo Schott)
(November 2016)

Barcelona GSE Working Paper 943

This paper introduces a maturity choice to the standard model of firm financing and investment. Long-term debt renders the optimal firm policy time-inconsistent. Lack of commitment gives rise to debt dilution. This problem becomes more severe during downturns. We show that cyclical debt dilution generates the observed counter-cyclical behavior of default, bond spreads, leverage, and debt maturity. It also generates the pro-cyclical term structure of corporate bond spreads. Debt dilution renders the equilibrium outcome constrained-inefficient: credit spreads are too high and investment is too low. In two policy experiments we find the following: (1) an outright ban of long-term debt improves welfare in our model economy, and (2.) debt dilution accounts for 84% of the credit spread and 25% of the welfare gap with respect to the first best allocation.

Bank Opacity and Financial Crises
(February 2016)

Barcelona GSE Working Paper 882; ADEMU Working Paper 2016/002; Barcelona GSE Focus

This paper studies a model of endogenous bank opacity. In the model, bank opacity is costly for society because it reduces market discipline and encourages banks to take on too much risk. This is true even in the absence of agency problems between banks and the ultimate bearers of the risk. Banks choose to be inefficiently opaque if the composition of a bank's balance sheet is proprietary information. Strategic behavior reduces transparency and increases the risk of a banking crisis. The model can explain why empirically a higher degree of bank competition leads to increased transparency. Optimal public disclosure requirements may make banks more vulnerable to a run for a given investment policy, but they reduce the risk of a run through an improvement in market discipline. The option of public stress tests is beneficial if the policy maker has access to public information only. This option can be harmful if the policy maker has access to banks' private information.

Work in Progress

Capital Structure, Uncertainty, and Macroeconomic Fluctuations

A Blessing in Disguise? Market Power and Growth with Financial Frictions" (with David Strauss)


Last updated: December 2016