Using firm, industry, and country-level data, we document a link between family ownership and labor relations. Across countries, we find that family ownership is relatively more prevalent in countries in which labor relations are difficult, consistent with firm-level evidence suggesting that...

Political struggles between the emerging European liberal states and the Catholic church in the 18th and 19th centuries provoked the formation of highly oppositional labor movements, resulting in Catholic countries having conflictual labor relations until the present. Based on the premise that...

We study the consequences of earnings management for the allocation of resources among firms, and we argue that fraudulent accounting has important economic consequences. We first build a model where the costs of earnings management are endogenous, and we show that, in equilibrium, bad managers...

What is the effect of government deficits on interest rates? This fundamental question has not been convincingly answered. We propose a no-arbitrage structural VAR method that allows us to incorporate the cross-sectional information in bond yields into a structural macroeconomic framework. We...

We investigate the role of permanent and transitory shocks for firms and aggregate dynamics. We directly model the dynamics of a large panel of firms. We find that permanent shocks to productivity and permanent shifts in the composition of output explain at least 4/5 of firms dynamics. However,...

Macroeconomists want to understand the effects of fiscal policy on interest rates, while financial economists look for the factors that drive the dynamics of the yield curve. To shed light on both issues, we present an empirical macro-finance model that combines a no-arbitrage affine term...

I consider a simple model of dynamic capital structure with adjustment costs, and I show how financial decisions reveal firms' preferences for leverage. I show that the most commonly used empirical models of capital structure (the partial adjustment model, and the financial deficit model) are...

I provide empirical evidence that badly governed firms respond more to aggregate shocks than do well governed firms. I build a simple model where managers are prone to over-invest and where shareholders are more willing to tolerate such a behavior in good times. The model successfully explains...

We argue that risk premia affect the valuation of financial distress costs because these costs are more likely to be incurred in bad times. We compute the NPV of distress costs using risk-adjusted default probabilities derived from corporate bond spreads. Because credit spreads are large, the...

This paper compares the impact of shocks to U.S. interest rates and emerging market bond spreads on domestic interest rates and exchange rates across several emerging market economies with different exchange rate regimes. Consistent with conventional priors, the results indicate that interest...