cash flows to remain stagnant while discount rates increase, resulting in lower stock prices. Both the equity risk premium … and nominal risk-free yields rise. However, longer-term real yields remain unchanged, and policy-sensitive real yields …

to small firms. Our model identifies the economic forces behind this trend. Small firms with little capital at risk are … subject to risk-shifting. They realize more of their workers risky ideas, helping small firms to poach creative workers from … firms take excessive risk, average enterprise profitability decreases, while bankruptcy increases. Moreover, large firms …