Most international commerce is carried out by multinational firms, which use their foreign affiliates for the majority of their foreign sales. In this paper, I examine the determinants of multinational firms' location and production decisions and the welfare implications of multinational...

We study the trading dynamics in an asset market where the quality of assets is private information of the owner and finding a counterparty takes time. When trading of a financial asset ceases in equilibrium as a response to an adverse shock to asset quality, a large player can resurrect the...

The standard argument for abstracting from capital accumulation in sticky-price macro models is based on their short-run focus: over this horizon, capital does not move much. This argument is more problematic in the context of real exchange rate (RER) dynamics, which are very persistent. In this...

This paper studies the determinants of optimal taxes for wealthy individuals faced with capital income risk. I develop a model of optimal taxation of capital income in which wealth and income inequality is a result of capital income shocks together with frictions in financial markets. I use the...

Countries in the Euro periphery have gone from zero sovereign spreads and healthy economic growth in 2006 to sovereign debt problems and deep recessions by 2010. This has been accompanied by a transfer of sovereign debts from foreigners to domestic residents and a shift in domestic portfolios...

During 1984-2004, the learning model outperforms other models. The updating parameter is calibrated using survey data, and the parameters are revised similarly - investors pay attention to approximately past thirty quarters of data on the level, slope and curvature of the yield curve. When...

The impact of economic institutions on development is presently taken for granted but there is surprisingly scarce evidence on the channels through which institutions affect the organization of output. Imperfections in contractual enforcement, for example, could lead firms to adopt technologies...

A salient feature of the recent recession is that regions that have experienced the largest changes in household leverage have also experienced the largest declines in output and employment. We study a cash-in-advance economy in which home equity borrowing, alongside public money, is used to...

A country's composition of knowledge affects its future growth, as technologies differ greatly in their scope of applications. In the presence of intersectoral knowledge linkages, trade or institutional barriers generate asymmetric effects on the R&D investment across sectors, hence the...

I study a model of trading under asymmetric information where traders may invest in the acquisition of skills that give them an informational advantage. I characterize conditions under which experts enhance of detract from market liquidity and study the socially efficient level of acquisition of...