How Much Would It Cost to Guarantee Debt for All Publicly Traded U.S. Corporations?

Contemporary Economic Policy, 0 [10.1111/coep.12657]

37 Pages Posted: 12 Jul 2024

See all articles by Stephen Matteo Miller

Stephen Matteo Miller

George Mason University - Mercatus Center

Multiple version iconThere are 2 versions of this paper

Date Written: June 22, 2024

Abstract

Estimated marked-to-market values of guaranteeing debt ex ante for all available publicly traded US corporations from Q4 1971 to Q4 2022 reveal that the largest estimates periodically arise with a handful of large financial corporations, but significant estimates can arise for nonfinancial corporations. In real Q1 2010 US dollars, the aggregate cost of guaranteeing debt reached $983 billion in Q1 2009 and $284.78 billion in Q1 2020 during the COVID-19 pandemic. Large observed guarantee estimates may reflect moral hazard, but also concerns about avoiding substantial increases in unemployment or maintaining the provision of essential services during national emergencies.

Keywords: Debt Guarantees, Financial Crises, National Emergencies, Too Big to Fail, Bailouts

JEL Classification: D78, G01, H25, H81, H84

Suggested Citation

Miller, Stephen Matteo, How Much Would It Cost to Guarantee Debt for All Publicly Traded U.S. Corporations? (June 22, 2024). Contemporary Economic Policy, 0 [10.1111/coep.12657], Available at SSRN: https://ssrn.com/abstract=4890947 or http://dx.doi.org/10.1111/coep.12657

Stephen Matteo Miller (Contact Author)

George Mason University - Mercatus Center ( email )

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