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An equilibrium model of financial crises driven by Irving Fisher's financial amplification mechanism features a pecuniary externality, because private agents do not internalize how the price of assets used for collateral respond to collective borrowing decisions, particularly when binding collateral constraints cause asset fire-sales and lead to a financial(More)
Asset prices reflect anticipations of future growth. We examine the asset pricing implications of a production economy whose long-term growth prospects are endoge-nously determined by innovation and R&D. In equilibrium, R&D endogenously drives a small, persistent component in productivity which generates long-run uncertainty about economic growth. With(More)
We present a prototype compressive video camera that encodes scene movement using a translated binary photomask in the optical path. The encoded recording can then be used to reconstruct multiple output frames from each captured image, effectively synthesizing high speed video. The use of a printed binary mask allows reconstruction at higher spatial(More)
A standard assumption of structural models of default is that firms assets evolve exoge-nously. In this paper, we document the importance of accounting for investment options in models of credit risk. In the presence of financing and investment frictions, firm-level variables which proxy for asset composition carry explanatory power for credit spreads(More)
Traditional real options models demonstrate the importance of the " option to wait " due to uncertainty over future shocks to project cash flows. However, there is often another important source of uncertainty: uncertainty over the permanence of past shocks. Adding Bayesian uncertainty over the permanence of past shocks augments the traditional option to(More)
Recent fiscal interventions have raised concerns about US public debt, future fiscal pressure, and long-run economic growth. This paper studies fiscal policy design in an economy in which: (i) the household has recursive preferences and is averse to both short-and long-run uncertainty, and (ii) growth is endogenously sustained through innovations whose(More)
Existing models show that herding in decisions can cause significant information loss, inferior information aggregation and impaired decision making. However, we show that in a multi-stage decision setting with endogenous information production, herding on the initial decision can actually result in superior aggregate information and improved decisions.(More)