The length between suppliers and demanders grows in distance under information shocks. Transaction times increase when the demander is willing to wait longer for a far off supplier. The aggregate yield curve pushes toward the long end, but potential growth remains fixed. The effect is to temporarily push part of the curve into negative territory, and we see things like Blockbuster being unable to adapt.
Under hydraulic macro, with fixed power spectrum, a sudden shift in the term structure must result in some bankruptcies.
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