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Financiers vs. Engineers : Should the Financial Sector be Taxed or Subsidized?

Philippon, Thomas - 2007

I study the allocation of human capital in an economy with production externalities, financial constraints and career choices. Agents choose to become entrepreneurs, workers or financiers. Entrepreneurship has positive externalities, but innovators face borrowing constraints and require the...

Persistent link: https://www.econbiz.de/10012465087

Real Options in a Dynamic Agency Model, with Applications to Financial Development, IPOs, and Business Risk

Philippon, Thomas - 2007

We study investment options in a dynamic agency model. Moral hazard creates an option to wait and agency conflicts affect the timing of investment. The model sheds light, theoretically and quantitatively, on the evolution of firms' dynamics, in particular the decline of the failure rate and the...

Persistent link: https://www.econbiz.de/10012465063

Why Has the U.S. Financial Sector Grown so Much? The Role of Corporate Finance

Philippon, Thomas - 2007

The share of finance in U.S. GDP has been multiplied by more than three over the postwar period. I argue, using … evidence and theory, that corporate finance is a key factor behind this evolution. Inside the finance industry, credit … intermediation and corporate finance are more important than globalization, increased trading, or the development of mutual funds for …

Persistent link: https://www.econbiz.de/10012465229

The Risk-Adjusted Cost of Financial Distress

Almeida, Heitor - 2005

In this paper we argue that risk-adjustment matters for the valuation of financial distress costs, since financial distress is more likely to happen in bad times. Systematic distress risk implies that the risk-adjusted probability of financial distress is larger than the historical probability....

Persistent link: https://www.econbiz.de/10012466991

Household Leverage and the Recession

Jones, Callum - 2011

We evaluate and partially challenge the 'household leverage' view of the Great Recession. In the data, employment and consumption declined more in states where household debt declined more. We study a model where liquidity constraints amplify the response of consumption and employment to changes...

Persistent link: https://www.econbiz.de/10012461692