Over the last fifteen years, emerging economies have been exposed to severe episodes of financial crises. In the mean time, an increasing share of investments is delegated to mutual funds. In this paper, we propose a small open-economy model where international investors hire fund managers to...

How do financial frictions affect the response of an economy to aggregate shocks? In this paper, we address this question, focusing on liquidity constraints and uninsurable idiosyncratic risk. We consider a search model where agents use a liquid asset to smooth individual income shocks. We show...

Inflation and unemployment are central issues in macroeconomics. While much progress has been made on these issues by incorporating frictions using search theory, existing models analyze either unemployment or inflation. We develop a framework to analyze unemployment and inflation together. This...