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I provide an explanation for the puzzle of slow recovery of aggregate real variables from financial crises. My model features a representative investor who finances firms with optimal long-term contracts derived from a moral hazard problem. An increase in uncertainty about firm-productivity...
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This paper investigates how of systematic risk varies over the lifecycle of the firm. If market equity beta is … determined by firm characteristics as the literature on the determinants of systematic risk holds, and if those characteristics … change over the lifecycle of the firm following a definite pattern as firm lifecycle theory suggests, then market equity beta …
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