We develop a tractable model to study the macroeconomic impacts of limited arbitrage by linking arbitrage activities with the macroeconomy through collateralization. We show that the interactions between speculative trading and the business cycle can work as a powerful transmission mechanism,...

Based on externalities in the allocation of interprovincial resources, we examine how geographic location affects firms’ access to resources and thus their information disclosure and stock price crash risk. The results show that border firms have a higher stock price crash risk than non-border...