Search Results
Showing results 1 to 5 of approximately 5.
(refine search)
Working Paper
The Credit Line Channel
Aggregate bank lending to firms expands following adverse macroeconomic shocks, such as the outbreak of COVID-19 or a monetary policy tightening, at odds with canonical models. Using loan-level supervisory data, we show that these dynamics are driven by draws on credit lines by large firms. Banks that experience larger drawdowns restrict term lending more — an externality onto smaller firms. Using a structural model, we show that credit lines are necessary to reproduce the flow of credit toward less constrained firms after adverse shocks. While credit lines increase total credit ...
Working Paper
Trade, Labor Reallocation Across Firms and Wage Inequality
This paper develops a framework for studying the effects of higher trade openness on the wage distribution that emphasizes within-industry labor reallocation across firms, strong skill-productivity complementarities in production and heterogenous fixed export costs across firms. Assuming no entry in the industry, an autarkic economy that opens to trade experiences a pervasive rise in wage inequality; a trade liberalization in a trading economy increases inequality at the lower end of the distribution, but may reduce it elsewhere. Assuming free entry, opening to trade could result in ...
Journal Article
Corporate Leverage and Investment
In this article, we examine the relationship between high corporate leverage and future firm investment spending on structures, machinery, and equipment. In other words, we examine how debt influences the growth of a firm’s capital stock or fixed assets. We find that, on average, more leveraged firms across industries tend to have lower levels of investment activity in the future. Specifically, we find that the negative relationship between debt and investment is strongest for the most highly indebted firms and is evident in both economic downturns and expansions.
Journal Article
The paper trail of knowledge transfers
Why do firms tend to locate near other firms? Economists suspect that geographic clustering spurs innovation by letting businesses tap a climate rich in informal transfers of knowledge. By tracing links between inventors filing for patents for the same inventions, Jeffrey Lin shares new evidence supporting the idea that proximity offers businesses tangible benefits.