We study the welfare implications of self-fulfilling bank runs and liquidity requirements, in a growth model where banks, facing persistent possible runs, can choose in any period a run-proof asset portfolio. In this framework, runs distort banks' insurance provision against idiosyncratic...

We report evidence that bank liquidity ratios (liquid assets as a percentage of total assets) decrease during the process of economic development. To reconcile this observation with the increasing importance of financial markets and the increasing direct participation of individual investors in...

We study the macroeconomic effects of bank runs in a neoclassical growth model with a fully microfounded banking system. In every period, the banks provide insurance against idiosyncratic liquidity shocks, but the possibility of sunspot-driven bank runs distorts the equilibrium allocation. In...

We study the macroeconomic effects of systemic bank runs in a neoclassical model with a microfounded banking system. In every period, the banks provide insurance against some idiosyncratic liquidity shocks, but the possibility of sunspot-driven bank runs distorts the equilibrium allocation. In a...

We report evidence that bank liquidity ratios (liquid assets as a percentage of total assets) decrease during the process of economic development. To reconcile this observation with (i) the increasing importance of financial markets and (ii) the increasing direct participation of individual...

How does the financial aid allocation mechanism affect student behavior? We provide a framework for quantifying the impact of financial aid on student debt, academic capital, and labor market outcomes. We specify and estimate a dynamic discrete choice model of simultaneous education, work, and...

How does financial aid design affect student behavior and achievement? We first estimate the impact of a study-aid reform that caused students to work more and accumulate less debt. To quantify mechanisms and perform counterfactuals, we estimate a dynamic model of college enrollment, work, and...