We describe a dynamic macroeconomic model that incorporates firm-level borrowing constraints, competitive CES loan production, and rigidities on both setting prices and wages. The external finance premium (interest-rate spread) is countercyclical with technology and financial shocks, and...

We model a labor market in which workers’ level of education might be a signal of skills. We show that whenever the wage premium for education increases over time – as it might happen under skill biased technological progress – the investment in education needed to sustain a separating...

We analyze trade between a perfectly informed price setting party (seller) and an imperfectly informed price taker (buyer). Differently from most of the literature, we focus on the case in which, under full information, it would be inefficient to trade goods of sufficiently poor quality. We show...

In a market where sellers are heterogeneous with respect to the quality of their good and are more informed than buyers, high quality sellers' chances to trade might depend on their ability to inform buyers about the quality of the goods they offer. We study how the strength of competition among...

In a market where sellers are heterogeneous with respect of the quality of their good and are more informed than buyers, high quality sellers' chances to trade might depend on their ability to inform buyers about the quality of the goods they offer. We study how the strength of competition among...

We consider a model of securities issues where the quality of securities is private information to the issuer, and firms of higher quality are more reluctant to issue securities than low quality firms. We show that, when the issuer directly trades with investors, market breakdown may occur. This...