The crucial difference between Foreign Direct Investment (FDI) and other international financial flows is that the former involves technology flows across countries. In the presence of country-specific shocks, these flows not only alter the distribution of output across countries, but also...

Consistent with a precautionary savings model, we demonstrate empirically that firms use equity financing to build up liquid asset reserves in response to an exogenous decline in the supply of credit. For identification, we compare public U.S. firms in the same industry, location, and size...