We introduce capital accumulation into an economy where individuals have private information with respect to productivity shocks. Efficient, incentive-compatible risk-sharing is achieved by conditioning current and future payoffs on the history of productivity reports. We develop a notion of...

We show that a rise in uncertainty on its own generates a substantial drop in employment, production and investment. In keeping with previous findings in the literature, we find these initial declines are larger in the presence of capital irreversibility than without, as firms experiencing...

We examine a monetary economy wherein endogenous asset market segmentation permits the extent of household participation in open market operations to vary smoothly with changes in aggregate conditions. While we impose no stickiness at the microeconomic level in either prices or portfolio...