How does small-firm employment respond to exogenous labor productivity risk? We find that this depends on the … depends on the weather. Weather risk reduces this employment, and the effect is stronger in regions where the regional banks … have less equity capital. Bank capitalization also proxies for the extent to which the regional banks' borrowers can obtain …

We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …

financial institutions in the transmission of credit and technology shocks to the real economy. A positive credit shock, defined … between loan and deposit rates. The effects of the credit shock tend to be highly persistent even without price rigidities and … habit persistence in consumption behaviour. -- bank credit ; financial intermediation ; firm heterogeneity and defaults …

for firms. We rationalize these findings in a model of risk sharing between a risk-averse firm and workers with limited …

We estimate the changes in US male labor market risk over the last three decades in a model of endogenous labor supply … a life-cycle model with search frictions, we show that the estimated changes in risk can account for 85 percent of the … increase in within group wage inequality. The welfare costs of rising risk are small. …