Prepayment risk is a major consideration in the US credit card market. According to industry studies, about 17% of balances are transferred annually. Using a dynamic model of repricing, this paper analyzes the impact of prepayment risk on the functioning of the credit card market. We show that...

We develop a model of credit card lending and consumer bankruptcy in which enforcement of debt repayment is endogenously determined within the lending industry. Our focus on enforcement of credit contracts is motivated by existing consumer debt collection practices, and is consistent with the...

This paper evaluates the performance of leading micro-founded pricing-to-market frictions vis-a-vis a set of robust stylized facts about international prices. In order to make that evaluation meaningful, we embed each friction into a unified IRBC framework and parameterize the models in a...

The paper studies the effects of non-exclusivity of credit card contracts on the provision of insurance through the institution of personal bankruptcy. In our model, lenders can continually observe borrower's time-varying creditworthiness and provide credit to them by undercutting (poaching) the...

In this paper, we argue that government confusion about the nature of the shock to the economy when observing banks in distress has the potential to relax the time inconsistency of policymakers and the ensuing collective moral hazard that leads to endogenous systemic events. Government confusion...

Using a comprehensive panel dataset on U.S. households, we study the effects of the 2005 bankruptcy reform on bankruptcy, delinquency and debt accumulation. We find that the reform coincided with a 23% permanent drop in the bankruptcy rate relative to pre-reform level. We further document that...

We document a growing polarization of investment strategies of institutional and individual investors in the US equity market since the 1990s. Institutional investors have been focusing more and more on active trading of individual securities, while individual investors have increasingly shifted...

This paper presents a model of sovereign default with multi-period debt contracts with endogenous maturity. The sovereign in the model chooses the most favorable combination of interest rate, loan size and maturity out of the contracts oered in equilibrium by international lenders. All three...

We study the negative feedback loop between the aggregate default rate and the efficacy of enforcement in a model of debt-financed entrepreneurial activity. The novel feature of our model is that enforcement capacity is accumulated ex ante and thus subject to depletion ex post. We characterize...

We study how advancements in automation technology affect the division of aggregate income between capital and labor in the context of long-run growth. Our analysis focuses on the fundamental trade-off between the labor-displacing effect of automation and its positive productivity effect in an...