Why does trust vary so substantially across countries? This paper presents a general
equilibrium growth model in which heterogeneous agents transact and face a moral hazard …

Consumption data generally indicates that consumption risk is not perfectly diversified
across individuals. This paper considers if and when imperfect diversification is a feature of …

We develop a general model of lending in the presence of endogenous borrowing
constraints. Borrowing constraints arise because borrowers face limited liability and debt …

This paper develops a small open economy model to study sovereign default and debt
renegotiation for emerging economies. The model features both endogenous default and …

Evidence on international capital flows suggests that foreign direct investment (FDI) is less
volatile than other financial flows. To explain this finding I model international capital flows …

We study a general equilibrium model in which entrepreneurs finance investment with
optimal financial contracts. Because of enforceability problems, contracts are constrained …

We document evidence of a “quality effect” of financial liberalization on allocative efficiency,
as measured by dispersion in Tobin's Q across firms. We predict that financial liberalization …

We study dynamic optimal taxation in a class of economies with private information. Optimal
allocations in these environments are complicated and history-dependent. Yet, we show that …

We present general recursive methods to handle environments where privately observed
variables are linked over time. We show that incentive compatible contracts are …

We consider an environment in which individuals receive income shocks that are
unobservable to others and can privately store resources. We provide a simple …