In this paper, we study the effects of uncertainty shocks in a quantitative framework where firms in the corporate sector are constrained by credit. Specifically, we formulate borrowing constraints as a nested function that features both earnings and capital as alternative instruments for...

The study proposes a text-based index for financial constraints using the phrase-matching algorithm. The index captures the severity of financial constraints by calculating the percentage of constraint phrases in the annual report. Using robust validation, the study finds that the text-based...

How do individual wages adjust to changes in financial constraints at the firm-level and what does this imply about aggregate wage dynamics in recessions with tight financial constraints? We derive testable implications for different theoretical mechanisms and estimate these based on German...

This paper investigates the impact of financial constraints on firms' inventory holdings, an area of significant interest given that inventories are volatile over the business cycle. I use detailed data on Swedish firms' balance sheets, income statements, and credit scores. I employ a regression...

We provide evidence that tighter monetary shocks reduce allocative efficiency, however, the effect of these shocks differs by firm characteristics such as markup, size, and age of firms. To identify the effect of these shocks, we use the Structural Vector Autoregressive (SVAR) model and the...

We analyze jointly optimal carbon pricing and leverage regulation in a model with financial constraints and endogenous climate-related transition and physical risks. The socially optimal emissions tax is below the Pigouvian benchmark (equal to the direct social cost of emissions) when emissions...