Secondary markets for long-term assets might be illiquid due to adverse selection. In a model in which moral hazard is confined to project initiation, I find that: (1) when agents expect a liquidity dry-up on such markets, they optimally choose to self-insure through the hoarding of non-productive but liquid assets; (2) such a response has negative externalities as it reduces ex-post market par...

Do teachers’ expectations directly impact student achievement? We draw on administrative data from North Carolina schools that report both test scores and of students’ performance these tests. Employing fixed effects instrumental variables strategies to overcome endogeneity concerns, we find higher exogenously determined teacher increase for fourth eighth graders. Impacts are suggestively large...