There are large countercyclical fluctuations in U.S. bankruptcy filings and real credit card interest rates, while unsecured credit is pro-cyclical. This paper documents the facts and asks whether the predictions of incomplete market models with bankruptcy are consistent with these facts. We...

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We show that the key identifying assumptions underlying the existing approaches to identifying technology shocks in the data are violated in models with heterogeneous capital and labor. We propose a new method to identifying technology shocks in the data in presence of factor heterogeneity and...

We analyze the effects of the observed increased share of delegated capital for trading strategies and equilibrium prices. We introduce delegation into a standard Lucas exchange economy, where in equilibrium some investors trade on their own account, but others decide to delegate trading to...

We propose a way to measure the contribution of search frictions to the level of wage dispersion observed in the data. Using the data from the 1979 cohort of the National Longitudinal Survey of Youth we find that the variance of match qualities between workers and employers accounts for about 6%...

We study optimal fiscal policy in a small open economy (SOE) with sovereign and private default risk. The SOE's government uses linear taxation to fund exogenous expenditures and uses public debt to inter-temporally allocate tax distortions. We characterize a class of environments in which the...

This paper develops a vintage-technology model, in which firms face idiosyncratic uncertainties in nonconvex technology adoption costs. We derive the generalized (S, s) adoption rule yielding the lumpy technology adoption behavior within an otherwise standard model and compute the stationary...

Capital equipment, such as computers and industrial machinery, embodies skill-biased technology and, hence, is complementary to skilled labor. Many countries, by importing a large share of their capital, import skill-biased technology and a rise in the skill premium. In this paper we develop a...

We estimate and report life cycle transition probabilities between employment, unemployment and inactivity for male workers using Current Population Survey monthly files. We assess the relative importance of each probability in explaining the life cycle profiles of participation and unemployment...

The opacity of over-the-counter (OTC) markets, in which a large number of financial products including credit derivatives trade, appears to have played a central role in the nancial crisis in 2007-09. We model such opacity of OTC markets in a general equilibrium setup where agents share risks,...