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...

We provide firm-level evidence that Federal Open Market Committee announcements have real effects by changing expectations of firm profitability. We use an existing decomposition of a monetary policy shock into a central bank information component (CBI) and a conventional monetary component...