How does uncertainty and credit constraints affect the cyclical composition of investment and thereby volatility and growth? This paper addresses this question within a model where firms engage in two types of investment: a short-term one; and a long-term one, which contributes more to...

Economics

Economics

[This item is a preserved copy. To view the original, visit http://econtheory.org/] Dispersion in retail prices of identical goods is inconsistent with the standard model of price competition among identical firms, which predicts that all prices will be driven down to cost. One common...

This paper investigates a real-business-cycle economy that features dispersed informationabout the underlying aggregate productivity shocks, taste shocks, and—potentially—shocks tomonopoly power. We show how the dispersion of information can (i) contribute to significantinertia in the...

Economics

Information regarding economic fundamentals is widely dispersed in society, is only imperfectly aggregated through prices or other indicators of aggregate activity, and cannot be centralized by the government or any other institution. In this paper we seek to identify policies that can improve...

This paper investigates how incomplete information impacts the response of prices to nominalshocks. Our baseline model is a variant of the Calvo model in which firms observe the underlyingnominal shocks with noise. In this model, the response of prices is pinned down by threeparameters: the...

This paper studies the effects of social network based lending. This is a pervasive phenomenon in most of the developing world. Access to such network capital has an obvious influence on investment. It also influences the pattern of migration since, ceteris paribus, migrants would prefer to be...

We find that institutional ownership in publicly traded companies is associated with more innovation (measured by cite-weighted patents). To explore the mechanism through which this link arises, we build a model that nests the lazy-manager hypothesis with career-concerns, where institutional...