experiences a shock forcing it to start learning afresh. Firms differ in their information; more informed firms have lower … posterior variances in beliefs. An uncertainty shock is a rise in the probability that any given firm will lose its information … a prolonged recession followed by anemic recovery in response to an uncertainty shock. When confronted with a rise in …

risk. Dispersion in MPK depends on (i) heterogeneity in firm-level risk premia and (ii) the price of risk, and thus is … countercyclical. We document strong empirical support for these predictions. Stock market-based measures of risk premia imply that … risk considerations explain about 30% of observed MPK dispersion among US firms and rationalize a large persistent …

Most macroeconomic models fail to replicate the level, volatility, and countercyclicality of risk premia which has been …-varying risk of economic disaster. Both asset prices and macroeconomic aggregates respond to this time-varying risk. The model is … prices. An increase in the risk of disaster leads to a collapse of investment and a recession, with no current or future …

We embed a news shock, a noisy indicator of the future state, in a two-state Markovswitching growth model. Our … historical periods in which uncertainty and risk premia were elevated because of news shocks. …

uncertainty shock with respect to economies with stricter regulations. Using additional labor ow data from Germany, France and UK …

the efficient allocation of resources across firms. I document that a higher availability of credit leads to a decline in …

-maximizing state-contingent markups, taking as given the behavior of all other industries. When consumers are risk-averse, industry … aggregate shock. The general equilibrium dispersion of markups implied by the optimization of heterogeneous industries creates …