Considerable research focuses on the aggregate impact of debt financing. We show that equity is empirically more important for firm growth than generally understood. An extra dollar of equity issuance is associated with an extra $0.93 of real assets, whereas an extra dollar of debt issuance is...

Due to the crisis of 2007-2009, financial friction macro models are being used to provide a theoretical foundation for the evaluation of 'unconventional policy'. In these models banks take deposits from households and lend to firms. Empirically, other financial channels that are missing in the...