show that financial development can rationalize the difference in growth rates between firms of different sizes across countries.

The recent financial crisis has been accompanied by severe contractions in economic activity and credit as well as unprecedented levels of uncertainty. This project constructs a quantitative model with default risk where an increase in dispersion leads firms to contract the size of their...

financial crisis. This paper develops a model of world trade and financial frictions to gain insights into the mechanisms by which a deterioration in financial conditions interact with countries' exports and imports. We extend the international business cycle model to a model of a continuum of...

In this paper we study these features using a game-theoretical model with coordination problems and repeated renegotiations. The key difference between 1980s and 1990s is the existence of secondary markets for bonds in 1990s. The markets play two roles. First, the liquidity of bonds lowers the...

In the last two decades, financial integration has increased dramatically across the world. At the same time, the fraction of countries in default has more than doubled. Contrary to theory, however, there appears to have been no substantial improvement in the degree of international risk...

Features of sovereign debts restructuring in 1980s and 1990s are quite different in two aspects. One is that the renegotiation periods are longer in 1980s than in 1990s, in spite of the fact that sovereign borrowing in 1980s is mainly bank loans with several big creditors, while in 1990s it is...

This paper studies the maturity, timing and relative size of repayments for sovereign debt. Using Bloomberg bond data for emerging economies, we document that sovereigns issue debt with shorter maturity but more back-loaded repayments during downturns. To account for this pattern, we study a...

This paper studies linkages across sovereign debt markets when debt is unenforceable and countries choose to default and renegotiate. In the model countries are linked to one another by borrowing from a common lender. Borrowing from a common lender connects borrowing rates across countries as...

We demonstrate the usefulness of our results by using them to shed light on the existing empirical evidence. In particular, we argue that the studies of Syverson (2004), Schmitz (2005), and Lagakos (2007) are examples of how differences in the market size affect productivity. Our results are...