There has been a substantial body of work modeling the co-movement of employment, vacancies, and output over the business cycle. This paper builds on this literature, and informed by empirical investigation, models worker and firm search and hiring behavior in a manner consistent with recent...

Short-time work - a wage subsidy conditional on hour reductions - has become an important tool of labor market policy in many European countries. As the scope of these policies expanded, concerns about side effects due to adverse selection increased. We develop a model of job retention policies...

This paper discusses the role of secret versus public reserve prices when bidders’ valuations depend positively on the seller’s private signal. A public reserve price is announced before the auction starts, and a secret reserve price is disclosed after the highest bid has been reached. The...

Negative interest rates remain a controversial policy for central banks. We study a novel signalling channel and ask under what conditions negative rates should exist in an optimal policymaker’s toolkit. We prove two necessary conditions for the optimality of negative rates: a time-consistent...

Executive dismissal following low reporting quality events is well documented. However, prior research examines public signals of low reporting quality (e.g., restatements), which also have implications for the board’s own reputation due to the public nature of the signal. To investigate the...

Earning a good reputation is crucial for the survival of new firms on online retailing and service platforms. With a dynamic price signaling model, we show that a high-quality firm can signal its unobserved quality by setting a lower introductory price than its low-quality counterpart. After...

We provide empirical evidence that the level of the dividend signals long-horizon future earnings and that the earnings information embedded in the dividend has implications for expected returns. From an earnings information perspective, we show the level of the dividend is associated with up to...

This paper introduces a new regime dependence of monetary policy due to information frictions: the effects of monetary policy shocks depend on the type of the fundamental macro shock in the economy. Specifically, output responses to monetary policy shocks are amplified relative to their...

Both empirical and theoretical studies suggest that currency attacks can occur even in a fixed exchange rate regime with sound fundamentals. Can mechanisms be designed to prevent such currency attacks? To address this question, we first need a theory of currency crisis. I argue that such a...

Excess sensitivity—the significant effects of monetary policy on long-term interest rates—is a well-known puzzle. This paper documents excess sensitivity as being more pronounced in response to monetary policy easing than monetary tightening—the asymmetric excess-sensitivity puzzle. A...