Using the recent U.S.-China trade war as a laboratory, we show that policy uncertainty shocks have a significant impact on stock prices. This impact is less negative for firms that heavily rely on bank debt whereas non-bank debt does not have a mitigating effect. Moreover, the mitigating effect...

This paper aims to identify the effect of monetary policy shocks on stock prices through the lens of Mundell and Fleming's “Impossible Trinity” theory. Our identification strategy seeks to solve the simultaneity and omitted variable problems inherent in studies that focus on the effect of...

The trade war between the United States and China has a significant impact on high-yield spreads, long-term interest rates, and stock prices. However, the 10-year-minus-2-year Treasury yield spread, whose inversion generated significant media chatter about a looming recession, does not seem to...

Life insurance companies, the largest institutional holders of corporate bonds, tilt their portfolios towards higher-yield bonds when interest rates decline. This tilt seems to be primarily driven by an increase in duration rather than credit risk and insurers do not seem to increase the credit...

We present a new fact: the higher the trade costs, the larger the fraction of entrepreneurs. We develop a model of international trade with occupational choice that delivers three new predictions as a refinement of this relationship, which are supported by the data: (i) entrepreneurship...

We show that bond financing is more similar to relationship lending than commonly believed and the borrower-lender relationship in this market may influence how economic shocks affect borrowing firms. In particular, we demonstrate the relationship between bond issuing corporations and life...