The model we explore is in the spirit of Hopenhayn (1992) and, more directly, an extension of Clementi and Palazzo (2010). Our interest here is to better understand how selection reshapes the dynamics of macro aggregates in a general equilibrium setting with realistic firm-level investment...

How important is financial development for economic development? A costly state verification model of financial intermediation is presented to address this question. The model is calibrated to match facts about the U.S. economy, such as intermediation spreads and the firm-size distribution for...

In this paper we are concerned with what drives international capital flows. The estimated spectra of net foreign asset positions show that they are driven almost entirely by low frequency components which argues against many of the dire warnings that are issued about short term adjustments in...