How Much Would It Cost to Guarantee Debt for All Publicly Traded US Corporations?
26 Pages Posted: 26 Apr 2024
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How Much Would It Cost to Guarantee Debt for All Publicly Traded US Corporations?
How Much Would It Cost to Guarantee Debt for All Publicly Traded U.S. Corporations?
Date Written: April 18, 2024
Abstract
Estimated marked-to-market values of guaranteeing debt ex ante for all available publicly traded US corporations from fourth quarter (Q4) 1971 to Q4 2022 reveal that the highest estimates periodically arise with a handful of large financial corporations, but nonfinancial corporations can also have significant estimates. The real Q1 2010 estimated cost peaks at $983 billion in Q1 2009 and $284.78 billion in Q1 2020 during the COVID-19 pandemic. Debt guarantees may reflect moral hazard but also concerns about avoiding substantial increases in unemployment or maintaining the provision of essential services during national emergencies. Leverage restrictions could limit actual debt guarantees.
Keywords: financial crises, too big to fail, debt guarantees, national emergencies
JEL Classification: D78, G01, H25, H81, H84
Suggested Citation: Suggested Citation