Search Results
Working Paper
The macroeconomics of firms' savings
The authors document that the U.S. non-financial corporate sector became a net lender in the 2000s, using aggregate and firm-level data. They develop a structural model with investment, debt, and equity. Debt is fiscally advantageous but subject to a no-default borrowing constraint. Equity allows the firm to suspend dividends when the cash flow is negative. Firms accumulate financial assets for precautionary reasons, yet value equity as partial insurance against shocks. The calibrated model replicates the prevalence of net savings in the period 2000-2007 and attributes the rise in corporate ...
Report
Vesting and control in venture capital contracts
Vesting of equity payments to an entrepreneur, which is a form of time-contingent compensation, is very common in venture capital contracts. Empirical research suggests that vesting is used to help overcome asymmetric information and agency problems. We show in a theoretical model that vesting equity to an entrepreneur over a long period of time acts as a screening device against a bad entrepreneur type. But incomplete contracts due to hold-up by the venture capitalist imply that equity compensation, in the form of either short-term or long-term vesting, cannot provide standard contractible ...
Working Paper
Are Friends of Schools the Enemies of Equity? The Interplay of Public School Funding Policies and Private External Fundraising
School districts across the U.S. have adopted funding policies designed to distribute resources more equitably across schools. However, schools are also increasing external fundraising efforts to supplement district budget allocations. We document the interaction between funding policies and fundraising efforts in Chicago Public Schools (CPS). We find that adoption of a weighted-student funding policy successfully reallocated more dollars to schools with high shares of students eligible for free/reduced-price (FRL) lunch, creating a policy-induced per-pupil expenditure gap. Further, almost ...
Conference Paper
Balancing growth with equity: the view from development
Conference Paper
Commentary: balancing growth with equity: the view from development
Journal Article
Banking on Basel : an alternative for capital requirements
Equity capital represents a bank?s net worth?the difference between its assets and liabilities. Put another way, it?s the value of assets financed by the bank?s owners, rather than depositors or other sources of funds. Capital serves as a buffer to absorb losses and prevent failures and figures prominently in the banking industry?s ability to lend.
Speech
Basel and the wider financial stability agenda
Remarks at the 2010 Institute of International Finance Annual Membership Meeting, Washington, D.C.
Speech
Housing and the economic recovery
Remarks at the New Jersey Bankers Association Economic Forum, Iselin, New Jersey.
Working Paper
The use of debt and equity in optimal financial contracts
We consider an environment in which risk-neutral firms must obtain external finance. They have access to two kinds of linear, stochastic investment opportunities. For one, return realizations are costlessly observed by all agents. For the other, return realizations are costlessly observed only by the investing firm; however, they can be (privately) observed by outsiders who bear a fixed verification cost. Thus, the second investment opportunity is subject to a standard costly state verification (CSV) problem of the type considered by Townsend (1979), Gale and Hellwig (1985), or Williamson ...