accounts for a significant part of this moderation.

We address the question of whether and how a sovereign should reduce its external indebtedness when default is a significant possibility, with a particular focus on whether a sovereign should buy back or dilute existing long-term sovereign bonds. Our main finding is that when reduction of debt...

In many markets, sellers advertise their good with an asking price. This is a price at which the seller will take his good off the market and trade immediately, though it is understood that a buyer can submit an offer below the asking price and that this offer may be accepted if the seller...

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...

In this paper, we examine the the determinents of the evolution of male hours by years of schooling within the U.S. between the mid-1960s through the late 2000s. We quantify the extent to which changes in wages, changes in female labor supply, changes in the taxes and transfers, changes in the...

In this paper we study the impact of moral hazard in labor contracts on the cross-sectional wage distribution, in particular, its effect on the extent of residual wage inequality. The tool of our analysis is a search model with job-to-job mobility and firm competition for workers. In our...

This paper develops a model of optimal government debt maturity in which the government cannot issue state-contingent bonds and the government cannot commit to fiscal policy. In contrast to an environment with full commitment, there is a tradeoff between the cost of funding and the benefit of...

I study the implications of fluctuations in new firm creation across industries for asset prices and macroeconomic quantities. I write a general equilibrium model with heterogeneous industries, allowing for firm entry and time variation in markups. Firms entering an industry increase competition...

This paper presents a model of human capital accumulation to better understand the take-off from stagnation to growth from 1500 to 2000 AD. Finitely lived households choose the quantity and quality of children. The key ingredient of the model is a spillover from parents to children in the...

We present an envelope theorem for establishing first-order conditions in decision problems involving continuous and discrete choices. Our theorem accommodates general dynamic programming problems, even with unbounded marginal utilities. And, unlike classical envelope theorems that focus only on...