This paper embeds a long-term financial contract subject to asymmetric information into an industry equilibrium model to explore the quantitative implications of endogenous financing constraints for job reallocation. In the model, firms sign upon entry long-term contracts with banks that finance...

We develop a heterogeneous-firms model with trade in goods, labor mobility and credit constraints due to moral hazard. Mitigating financial frictions reduces the incentive of high-skilled workers to migrate to one region such that an unequal distribution of industrial activity becomes less...

We examine firms' simultaneous choice of investment, debt financing and liquidity in a large sample of US corporates between 1980 and 2014. We partition the sample according to the firms' financial constraints and their needs to hedge against future shortfalls in operating income. In contrast to...