This paper studies the implications of perceived default risk for aggregate output and productivity. Using a model of … credit across firms with heterogeneous productivity. Further, we find that these losses accounted for over half of the … productivity fall between 2008 and 2009, and persisted for smaller (although not larger) firms. …

intensively if its productivity realization is large and curtailed otherwise. Some investment in even the riskiest technologies …

I incorporate the productivity risks into an investment-based q-factor asset pricing model. The productivity risks … parsimonious q-factor model driven by productivity risks explains about 90% variation of return of 25 Size/BM portfolios and 75 …-factor model, and the Hou, Mo, Xue & Zhang (2020) augmented q-factor model. As such, productivity risks significantly affect asset …

We develop a theory linking "misallocation," i.e., dispersion in marginal products of capital (MPK), to macroeconomic … productivity by as much as 6%, suggesting large "productivity costs" of business cycles. …

points, of which approximately 77% is from the reduction in total factor productivity growth, 21% is from slower labor growth …-level total factor productivity, and the transmission mechanisms are reduced human capital investment and a tightened financial …