The paper analyzes the welfare implications of mandatory disclosure of losses at financial institutions when it is common knowledge that some banks have incurred losses but not which ones. We develop a model that features "contagion," meaning that banks not hit by shocks may still suffer losses...

In reality, many other markets are characterized by a small amount of search frictions, yet time variation in gross flows and real economic activity are less pronounced than in the labor and housing markets. This paper asks "why?" Preliminary evidence suggests that heterogeneity amongst workers...

The classic optimal currency area criterion is that countries with more correlated shocks are better candidates to form a union. We show that when countries have credibility problems this simple criterion must be changed: Symmetric countries gain credibility when joining the union only when the...

In the Great Contraction, regions of the United States that experienced the largest change in household debt to income ratios also experienced the largest drops in output and employment. Such output drops not only occurred for firms that sell primarily to a local region but also for regional...

The maturity of government debt varies across countries and time. We document that in times of high inflation the maturity of debt is shorter and the level of debt is lower. We develop a model of the maturity of debt based on government credibility. We show that credible government who can...