We present a general equilibrium-mechanism design model with two-sided limited commitment that accounts for the observed heterogeneity in firms’ investment, payout and CEO-compensation policies. In the model, shareholders cannot commit to holding negative net present value projects, and...

We study the link between timing of cash flows and expected returns in general equilibrium production economies. Standard neoclassical RBC models produce an upward-sloping term structure of equity returns. Our economy incorporates heterogeneous exposure to aggregate productivity shocks across...

In this paper, we investigate the design of optimal unemployment insurance in an environment with moral hazard and cyclical fluctuations. The optimal unemployment insurance contract balances the insurance motive to provide consumption for the unemployed with the provision of incentives to search...