Transcription of Chapter One Introduction 1 Chapter One Introduction
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Chapter One Introduction 1 Chapter One Introduction Abstract: The theme of this book is that the application of Stochastic Optimal Control (SOC) is very helpful in understanding and predicting debt crises. The mathematical analysis is applied empirically to the financial debt crisis of 2008, the crises of the 1980s and concludes with an analysis of the European debt crisis. I use SOC to derive a theoretically founded quantitative measure of an optimal, and an excessive leverage/ debt/ risk that increases the probability of a crisis. The optimal leverage balances risk against expected growth.
Chapter One Introduction 1 Chapter One Introduction Abstract: The theme of this book is that the application of Stochastic Optimal Control (SOC) is very helpful in understanding and predicting debt crises.
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