Corporate profits are volatile and highly procyclical in the aggregate, but there is substantial heterogeneity across firms in the extent of this procyclicality: I document that firms with lower productivity or higher book-to-market have more procyclical profits. A simple static profit...

Firms spend significant resources on creating and maintaining long-term customer relationships. We explore the role of this customer capital - a form of intangible capital - for firm valuation and physical investment. We build a general equilibrium model of long-term customer relationships,...

This paper attempts to reconcile the high apparent aggregate elasticity of labor supply with small micro estimates. We elaborate on Rogerson's seminal work (1988) and show that his results rely neither on complete markets nor on lotteries, but rather on the indivisibility and the fact that the...

In this paper, I propose and test a simple technology-based theory of firms' sensitivities to aggregate shocks. I show that when the elasticity of substitution between capital and labor is below unity, low profitability firms are more sensitive to aggregate shocks, i.e. to the business cycle....

In France, firms with 50 employees or more face substantially more regulation than firms with less than 50. As a result, the size distribution of firms is visibly distorted: there are many firms with exactly 49 employees. We model the regulation as a sunk cost that must be paid the first time...

What is the macroeconomic effect of having a substantial number of firms close to default? This paper studies financial distress costs in a model where customers, suppliers and workers suffer losses if their employer goes bankrupt. I show that this mechanism generates amplification of...

In order to develop a model that fits both business cycles and asset pricing facts, this paper introduces a small, time-varying risk of economic disaster in an otherwise standard real business cycle model. This simple feature can generate large and volatile risk premia. The paper establishes two...

What accounts for the unprecedented decline in world trade during the crisis? What have been the consequences of shifting risk appetites for international capital flows? How have they differed across developed and developing economies? We answer these questions in an international real business...

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