"After the Great Depression John Maynard Keynes led the way in building a new macroeconomic framework to deal with that unprecedented economic reality. Ten years after our own crisis, however, macroeconomics has not come to terms with how to grapple with the idea of financial crises in its...

When the value of a pledgeable asset (or project) is uncertain, investors are tempted to examine it. The asset owner ultimately bears the information cost, reducing her financing capacity. A pecking order emerges. Debt generates a greater financing capacity than equity: unlike equity investors...

Sovereign bonds are highly divisible, usually of uncertain quality, and auctioned in large lots to a large number of investors. This leads us to assume that no individual bidder can affect the bond price, and to develop a tractable Walrasian theory of Treasury auctions in which investors are...

Sovereign bonds are highly divisible, usually of uncertain quality, and auctioned in large lots to a large number of investors. This leads us to assume that no individual bidder can affect the bond price, and to develop a tractable Walrasian theory of Treasury auctions in which investors are...

How does investors' information about a country's fundamentals, and the fact that this information may be asymmetrically held, affect a country's financing cost? Motivated by this question, and by the observation that sovereign bonds are usually auctioned in large lots to a large number of...