We develop a dynamic model with time variation in external equity financing costs and show that variation in these costs is important for the model to quantitatively capture the joint dynamics of firms' asset prices, real quantities, and financial flows in the U.S. economy. Growth firms and high...

Heterogeneity in the composition of the labor force affects asset prices in the cross section. We combine a model of labor heterogeneity with a neoclassical q-theory model with labor adjustment costs and show that the negative expected return-hiring rate relation documented in previous studies...

Online appendix for the Review of Economic Dynamics article

We provide a theoretical and empirical analysis of the link between advertising expenditures, brand capital, and asset returns in the cross-section of U.S. publicly traded firms. Interpreting advertising expenditures as firms' investment in brand capital, we document that: (i) firms with high...

The ability of corporations to raise external equity finance varies with macroeconomic conditions, suggesting that the cost of equity issuance is time-varying. Using cross sectional data on U.S. publicly traded firms, we construct an empirical proxy of an aggregate shock to the cost of equity...

The ability of corporations to raise external equity finance varies with macroeconomic conditions, suggesting that the cost of equity issuance is time-varying. Using cross sectional data on U.S. publicly traded firms, we construct an empirical proxy of an aggregate shock to the cost of equity...

This paper studies the financial sources of aggregate risks and their impact for the cross section of asset prices. We show that in a dynamic general equilibrium model with frictions in both equity and debt markets, shocks to the costs of external equity and debt issuances, affect households'...