This paper extends the income fluctuations problem to an economy with endogenous growth. In the present setup, individuals, instead of owning an stream of endowments, accumulate capital with an investment irreversibility constraint and face uninsurable idiosyncratic risks to the return to...

If collateral for bank loans is scarce and as a result access to secured loans is restricted, the allocation of resources is inefficient. Anticipating future borrowing constraints, individuals over-invest in collateralized types of capital, whereas consumption and investment expenditures are...

Central banks have consistently differentiated the return on the securities they have issued (money and national debt). In contrast, first best efficiency demands that these securities earn the same return: the return on capital. A self-financed central bank, without capital and taxes, cannot...

This is an empirical study of the determinants of stock holdings using data from the U.S. Survey of Consumer Finances from 1992 to 2001. There is a great heterogeneity in the way households form their portfolios. Stock ownership is positively correlated with various measures of wealth, age,...

This is a comment on the work of Rocheteau and Wright (2005) who have recently introduced competitive search into monetary economics. We extend their work by eliminating the restriction that the fees market makers charge to enter a submarket must be either non-negative or identical for buyers...

We study the effects of inflation in a competitive search model where each buyer's utility is private information, and where money is essential in facilitating trade. The equilibrium is efficient at the Friedman rule, but inflation creates an inefficiency in the terms of trade. Buyers experience...

We evaluate the effects of corporate taxation on firms' investment and financing choices. We focus on how the asymmetry of the corporate tax, imperfect loss carry-overs, endogenous financing with credit constraints, and different degrees of investment irreversibility affect both incremental...

This paper provides a discrete-time framework for analyzing a firm's investment and financial choices under uncertainty. The investment decision is incremental and subject to a parameterized degree of irreversibility. Corporate taxes are asymmetric, but we allow imperfect carry-forward or...

We extend the concept of competitive search to an environment where, as is often common, sellers cannot observe the willingness to pay of their clients. This theoretical contribution is applied to model retail trade. We find that in equilibrium the ratio of buyers over sellers exceeds that of...

This paper advances a simple model that emphasizes the diversity of capital types, some of these types are long lived, while others are highly specific. This modeling of capital implies that irreversibility constraints may be strongly binding, thus generating sizable capital losses, even with...