This paper analyzes a general equilibrium heterogeneous agents model that includes borrowing constraints and uninsurable idiosyncratic production risks. In particular, it addresses the impact of these frictions on entrepreneurial investment and illustrates the trade-off between productivity risk...

This paper studies cyclical properties of the private risk premium in a model where a continuum of heterogeneous entrepreneurs are subject to aggregate as well as idiosyncratic risks, both of which are assumed to be highly persistent. The calibrated model matches highly skewed wealth and income...

When the 1987 general elections brought a durable government to Portugal, the national environment was still inflationary. Nevertheless, thanks to the efforts of successive ministers of finance/central bank governor pairs, the criteria for Economic and Monetary Union (EMU) were met and the...

Net equity issuance occurs frequently and is quantitatively important for both small and large publicly traded firms. Moreover, we show that net equity and net debt issuance are positively correlated and both are procyclical for small firms. For large firms net equity issuance is neither...

This paper develops a new framework that combines agency problems associated with managerial behavior and firm finance in a dynamic macroeconomic model. Agency costs arise because neither the shareholders nor the debt provider can directly control the manager's choice of how much risk to assume,...