This paper revisits the role of the manufacturing sector during the middle-income stage. By exploiting a large dataset that covers internationally comparable sectoral information, we prove that the manufacturing sector is imbued with three important characteristics. First, for middle-income...

This study shows that technological specialization is the primary driver of long-term international capital flows. The underlying mechanism comprises the two faces of capital scarcity: although a shortage of capital currently generates a higher marginal product, it also makes a country incline...

This paper investigates the cross-sectional relationship between corporate market power and cash holdings. To begin with, we empirically show that firms with higher markup tend to have larger cash holdings on their balance sheets. Then we rationalize this empirical finding in a model with risky...

This paper investigates the "misallocation" implications of corporate internal financing. We introduce corporate risk management into a standard continuous-time heterogeneous agent model with incomplete markets. We show that the economy's ability to allocate resources through the price mechanism...

This paper investigates the impacts of superstar firms and their cash hoarding behaviors on capital misallocation through the lens of an endogenous firm-market boundary. Empirically I find that since the 1980s, capital allocation efficiency has been deteriorating in the United States. To explain...

This paper investigates the effects of financial globalization on bank risk by highlighting the role of rollover risk. We extend the canonical rollover risk model by allowing an “active” bank manager to choose excessive risk-taking or systemic risk-shifting actions. Financial globalization...

This study quantifies and decomposes the impact of increasing firm risk on different production factors. We find that a one standard deviation increase in firm-level risk reduces the total output growth rate of a firm by 1.19 percentage points, of which approximately 77% is from the reduction in...