This paper investigates the link between the optimal level of non-financial firms' leverage and macroeconomic uncertainty. We develop a structural model of a firm's value maximization problem that predicts that as macroeconomic uncertainty increases the firm will decrease its optimal level of...

This paper investigates the effects of macroeconomic volatility on nonfinancial firms cash holding behavior. Using an augmented cash bufferstock model, we demonstrate that an increase in macroeconomic volatility will cause the crosssectional distribution of firms cashtoasset ratios to narrow. We...

This paper investigates the effects of macroeconomic volatility on non-financial firms' cash holding behavior. Using an augmented cash buffer-stock model, we demonstrate that an increase in macroeconomic volatility will cause the cross-sectional distribution of firms' cash-to-asset ratios to...