We use maximum likelihood techniques to distinguish across models of international capital flows using a comprehensive dataset on GDP, capital stocks, consumption, investment, employment, and net exports (used to measure capital flows) for 200 countries between 1950 and 2005. Specifically, we...

This paper examines whether financial constraints affect firms’ investment decisions for older (larger) firms. We compare a group of unbanked firms to firms that rely on formal financing. Specifically, we combine data from the Spanish Mercantile Registry and the Bank of Spain Credit Registry...

We formulate and solve a range of dynamic models of information-constrained credit markets that allow for moral hazard and unobservable investment. We compare them to the exogenously incomplete markets environments of autarky, saving only, and borrowing and lending in a single asset. We use...

We analyze the role of commitment in a dynamic principal-agent model of optimal insurance with hidden effort and observable but non-contractible assets. We argue that the optimal contract under full commitment is time-inconsistent. Consequently, we solve for and analyze the optimal insurance...

We introduce learning based on genetic algorithms in a principal-agent model of optimal contracting under moral hazard. Applications of this setting abound in finance (credit under moral hazard), public finance (optimal taxation, information-constrained insurance), development (sharecropping),...

We use a unique detailed database with individual state campaign contributions made by banks in U.S. from 1998 to 2010 to understand how these contributions influence the regulation of the banking industry in that state, and in particular the approval of bank mergers by the state banking...

There are two facts about the world that we take as given: First the "law of one price" is false -- one can find many different prices for what appears to be, beyond reasonable doubt, the same good. Second, prices are set in nominal terms and appear, beyond reasonable doubt, to be sticky -- some...

This paper studies the link between banking crises, sovereign default and government guarantees. A banking crisis can lead to a domestic credit crunch, which can be mitigated by government guarantees. However, the provision of bailout guaran- tees exposes the government to potentially severe...

We present a signalling theory of quantitative easing in which open market operations that change the duration of outstanding nominal government debt affect the incentives of the central bank in determining the real interest rate. In a time consistent (Markov-perfect) equilibrium of a...

capital is imbalanced between the two markets.