A Theory of Debt Based on the Inalienability of Human Capital /
Hart, Oliver.
A Theory of Debt Based on the Inalienability of Human Capital / Oliver Hart, John Moore. - Cambridge, Mass. National Bureau of Economic Research 1991. - 1 online resource: illustrations (black and white); - NBER working paper series no. w3906 . - Working Paper Series (National Bureau of Economic Research) no. w3906. .
November 1991.
Consider an entrepreneur who needs to raise funds from an investor, but cannot commit not to withdraw his human capital from the project. The possibility of a default or quit puts an upper bound on the total future indebtedness from the entrepreneur to the investor at any date. We characterize the optimal repayment path and show how it is affected both by the maturity structure of the project return stream and by the durability and specificity of project assets. Our results are consistent with the conventional wisdom about what determines the maturity structure of (long-term) debt contracts.
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Mode of access: World Wide Web.
A Theory of Debt Based on the Inalienability of Human Capital / Oliver Hart, John Moore. - Cambridge, Mass. National Bureau of Economic Research 1991. - 1 online resource: illustrations (black and white); - NBER working paper series no. w3906 . - Working Paper Series (National Bureau of Economic Research) no. w3906. .
November 1991.
Consider an entrepreneur who needs to raise funds from an investor, but cannot commit not to withdraw his human capital from the project. The possibility of a default or quit puts an upper bound on the total future indebtedness from the entrepreneur to the investor at any date. We characterize the optimal repayment path and show how it is affected both by the maturity structure of the project return stream and by the durability and specificity of project assets. Our results are consistent with the conventional wisdom about what determines the maturity structure of (long-term) debt contracts.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.