Bank liabilities include debt with long-term maturities and deposits that typically are not withdrawn for extended periods. This subjects bank liabilities to debt dilution. Our analysis shows that this has major effects for how monetary policy shocks are transmitted to banks and for optimal...

We determine optimal token issuance and fee rates for issuers with varying degrees of commitment. For the polar cases of no commitment (Markov perfect) and full commitment (Ramsey) we study the conditions under which equilibriums exist. Assuming convex maintenance costs guarantees well-defined...

The majority of bank liabilities are deposits typically not withdrawn for extended periods. We propose a dynamic model of banks in which depositors forecast banks' leverage and default decisions, and withdraw optimally by trading off current against future liquidity needs. Endogenous deposit...

We present a dynamic general equilibrium model of bank runs where global games are utilized as the equilibrium selection criterion. Coordination failures among bank creditors lead to panic-based runs. An endogenous borrowing constraint emerges as banks internalize the impact of their leverage...

I investigate the impact of bank capital requirements in a business cycle model with corporate debt choice. Compared to non-bank investors, banks provide restructurable loans that reduce firm bankruptcy losses and enhance production efficiency. Raising capital requirements eliminates deposit...

Financial covenants influence firm behavior by state-contingently allocating decision rights. I develop a quantitative model with long-term debt where shareholders cannot commit to not dilute existing lenders with new debt issuances and risky investments. Lenders intervene upon covenant...

We document S-shaped dynamics of the US economy associated with the construction of the Interstate Highway System in the 1960s. We then propose a business cycle model with two steady states arising due to productive public capital and production non-convexities. Small-scale short-run public...