This paper studies the international propagation of sovereign debt default. We posit a two-country economy where capital constrained banks grant loans to firms and invest in bonds issued by the domestic and the foreign government. The model economy is calibrated to data from Europe, with the two...

This paper formalizes a theory of the obsolescence and decline of social capital based on the interplay between social capital and the flexibility of productive resources. In our economy, agents with specific skills are held up by their principals. Inside communities, agents learn about each...

New firms are often based on ideas that the founders developed while working for incumbent firms. We study the macroeconomic effects of spinoffs through a growth model of product variety expansion, driven by firm entry, and product innovation. Spinoffs stem from conflicts of interest between...

What are the long-run aggregate effects of monetary shocks displaying throughthe credit channel of monetary policy? We address this question by investigatingthe transmission mechanism and estimating the dynamic behaviour of variablesrelated to credit and innovation. Then, we develop a DSGE model...

Does bank experience reduce moral hazard in credit markets? Using U.S. corporate loan-level data, we find that, while experience with borrowers and co-lenders reinforces banks’ monitoring incentives, sector experience dilutes them, calling for larger involvement in lending syndicates. In...

Does bank experience reduce moral hazard in credit markets? Using U.S. corporate loan-level data, we find that, while experience with borrowers and co-lenders reinforces banks’ monitoring incentives, sector experience dilutes them, calling for larger involvement in lending syndicates. In...