Contingent Capital: The Trigger Problem

18 Pages Posted: 20 Dec 2012

See all articles by Edward S. Prescott

Edward S. Prescott

Federal Reserve Banks - Federal Reserve Bank of Cleveland

Multiple version iconThere 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

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

Edward (Ned) Simpson Prescott (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

P.O. Box 6387
Cleveland, OH 44101
United States

HOME PAGE: http://https://www.clevelandfed.org/people-search?pid=f8ca941e-4b51-41f6-95f8-c87f1d3806e5

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