We document countercyclical corporate saving behavior with the degree of countercyclicality varying nonmonotonically with firm size. We then develop a dynamic stochastic general equilibrium model with heterogeneous firms to explain the pattern and study its implications for business cycles. In...

We document a hump-shaped relation between corporate cash and both real and nominal interest rates in both aggregate and firm-level data. We rationalize this result in a model where firms finance investment with cash and risky debt. The risky rate rises endogenously with the risk-free rate,...

China's GDP has grown at a tremendous rate over the last 40 years, but its total R&D expenditure has grown even more. We construct a model of firm dynamics which produces endogenous increases in R&D and productivity. We then take the model to the data and find that R&D expenditure as a...

We document countercyclical corporate saving behavior with the degree of countercyclicality varying nonmonotonically with firm size. We then develop a dynamic stochastic general equilibrium model with heterogeneous firms to explain the pattern and study its implications for business cycles. In...

High-tech firms hold substantial cash reserves. Potential explanations in the literature for this phenomenon include R&D adjustment costs, financial frictions, knowledge spillover, innovation uncertainty, and market competition. We build a parsimonious industry equilibrium model that...

With cashless transactions gaining momentum in developing countries, understanding the impacts of payment-system development on the real economy becomes essential. In this paper, we exploit India's demonetization shock to estimate the degree of payment-system development in India and rely on a...

I explore the role of the just-in-time (JIT) inventory system in the increase in cash holdings by U.S. manufacturing firms. I develop a model to illustrate the mechanism through which JIT affects cash, and quantify its impact. In the model, both cash and inventory can serve as working capital....