Trade in services has increased significantly and the United States has been a leader in services trade. The U.S. not only accounts for the largest share of world trade in private services but also runs a substantial amount of surplus in services trade. One important trend has been the rapid...

Most of the large economies in the world are dominated by services, in that services compose more than 50% of their GDP. Even in India, where most of the employment (60%) is in agriculture, services contributed just over 60% of the GDP in 2005. An exception is China, where the industrial sector...

We consider a moral hazard setup wherein leveraged firms have incentivesto take on excessive risks and are thus rationed when they attempt toroll over debt. Firms can sell assets to alleviate rationing. Liquidatedassets are purchased by non-rationed firms but their borrowing capacityis also...

Two activists with correlated private positions in a firm's stock, trade sequentially before simultaneously exerting effort that determines the firm's value. We document the existence of a novel linear equilibrium in which an activist's trades have positive sensitivity to her block size, but...

A firm can merge with one of n potential partners. The owner of each firm has private information about both his firm's stand-alone value and a component of the synergies that would be realized by the merger involving his firm. We characterize incentive-efficient mechanisms in two cases. First,...

A firm can merge with one of n potential partners. The owner of each firm has private information about both his firm’s stand-alone value and a component of the synergies that would be realized by the merger involving his firm. We characterize incentive-efficient mechanisms in two cases....

This paper develops a dynamic model of the capital structure based on the need to collateralize loans with tangible assets. The model provides a unified theory of optimal firm financing in terms of the optimal capital structure, investment, leasing, and risk management policy. Tangible assets...

We study whether borrowers optimally conserve debt capacity to take advantage of investment opportunities due to temporarily low asset prices, when financing is subject to collateral constraints due to limited enforcement. We find that borrowers may exhaust their debt capacity and thus may be...

A firm can merge with one of n potential partners. The owner of each firm has private information about both his firm's stand-alone value and a component of the synergies that would be realized by the merger involving his firm. We characterize incentive-efficient mechanisms in two cases. First,...