The editor regrets two errors in the Brunnermeier and Oehmke article (2013) in the April 2013 issue. On page 484, text was omitted from the second sentence of the third paragraph. The text should read, “However, the key friction that leads to inefficient short term financing is the borrower's inability to commit to an aggregate maturity structure when dealing with multiple creditors.”

On page 491, the upper limit of the integral at the beginning of equation (4) was incorrectly typeset in the equation and in the paragraph immediately following. The correct equation and text should read:

  • display math(4)

The interpretation of (4) is as follows. When inline image < inline image, the short-term cred- itors withdraw their funding at the rollover date and the financial institution defaults. Long-term debt is accelerated, and each rollover creditor receives inline image.8 When inline imageinline image, short-term creditors roll over, in which case they are promised a new face value inline image(inline image), which in expectation has to be worth inline image. Together, these two terms must be equal to the setup cost for rollover creditors to break even.


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