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Recessions are often accompanied by spikes of corporate default and prolonged declines of business credit. This paper argues that credit and default cycles are the outcomes of variations in self-fulfilling beliefs about credit market conditions. We develop a tractable macroeconomic model in which leverage ratios and interest spreads are determined in optimal credit contracts that reflect the expected default risk of borrowing forms. We calibrate the model to evaluate the impact of sunspots and fundamental shocks on the credit market and on output dynamics. Self-fulfilling changes in credit market expectations trigger sizable reactions in default rates and generate endogenously persistent credit and output cycles. All credit market shocks together account for about 50% of the variation of U.S. output growth during 1982-2015. ; The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.

Sovereign borrowing is often used to cover the costs of war. This borrowing, coupled with war's economic disruptions, strains states' ability to honor debt promises. Contrary to conventional expectations, however, we find that default is not common after wars. To explain the relationship between war and sovereign default, this article lays out a selection effect argument: war participants are unlikely to default in the first place, while states likely to default are unable to acquire the financing necessary to fight a war. In sum, states that lack the financial means to adequately borrow avoid paths to war. After offering some examples of the selection mechanism at work, we present evidence that states unlikely to default will avoid entering the war sample. Our findings have implications for the inferences researchers make about war finance and war onset.

Using the widely publicised example of Google's multi - script typeface Noto as a central example, this paper explores how democracy might be represented through typographic form. The legacy of the 'universal typographic form', first dreamed up by modernist designers in Europe in the 1920s, is identified as a precursor for Google's attempt to provide 'beautiful and free fonts for all languages' through Noto. The paper draws on Victor Papanek's 'function - complex' as a means of criticising Google's objectives, and questions whether the Noto designs, which are likely to become default for languages that have previously lacked typographic representation, are ill-founded in their attempt to visually harmonise the world's typographic script.