"We quantify the role of financial frictions and the initial misallocation of resources in explaining development dynamics. Following a reform that triggers efficient reallocation of resources, our model economy with financial frictions converges slowly to the new steady state-it takes twice as...

What are the effects of a temporary lockdown of the economy? Do firms' deteriorating balance sheets and labor market frictions propagate and prolong the effects? We answer these questions in a model with financial and labor market frictions. The model makes quantitative predictions about the...

We quantify the role of financial frictions and the initial misallocation of resources in explaining development dynamics. Following a reform that triggers efficient reallocation of resources, our model economy with financial frictions converges slowly to the new steady state--it takes twice as...

What are the effects of a large temporary shock to the economy such as a temporary lockdown in response to a pandemic? Are the effects propagated and made persistent by firms' deteriorating balance sheets and labor market frictions? This paper develops a model with financial market and labor...

We review both the theoretical and empirical literature on entrepreneurship and financial frictions, with an emphasis on the heterogeneous and dynamic micro-level implications of financial frictions for macro development

This paper studies optimal fiscal policy in an economy with heterogeneous households and incomplete markets. Relative to a representative-agent version of the model, the Ramsey planner takes into account the idiosyncratic income risk faced by heterogeneous households in a way that alters the...