Although existing theories predict a causal link between informational frictions in financial markets and a firm’s choice of asset liquidity, the lack of an exogenous and clean measure of informational frictions hinders the precise identification of this link. Using the discontinuous requirement of financial reporting introduced by Section 404 of the Sarbanes-Oxley Act, we identify a causal eff...

We develop a tractable infinite horizon model of bubbles and unemployment. Our theoretical analysis proves that stimulate capital accumulation, reduce unemployment, increase consumption. then numerically investigate the impacts credit constraints, labor market conditions, redistribution policy on welfare. numerical investigations show social welfare in bubbly steady state is always greater than...

• A model is present in which transitory financial shocks can generate a secular stagnation output, asset prices, and interest rates. The strong propagation results from large endogenous price volatility of land makes the collateral constraints quantitatively important. high achieved by complementarity services consumption households’ preference, disciplined micro data. We explore persistent sl...