We study investment options in a dynamic agency model. Moral hazard creates an option to wait and agency conflicts affect the timing of investment. The model sheds light, theoretically and quantitatively, on the evolution of firms' dynamics, in particular the decline of the failure rate and the decrease in the age of IPOs.
Fossil fuel CO2 emissions in the United States decreased by ∼11% between 2007 and 2013, from 6,023 to 5,377 Mt. This decline has been widely attributed to a shift from the use of coal to natural gas in US electricity production. However, the factors driving the decline have not been quantitatively evaluated; the role of natural gas in the decline therefore… (More)
Private equity critics claim that leveraged buyouts bring huge job losses and few gains in operating performance. To evaluate these claims, we construct and analyze a new dataset that covers US buyouts from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing to controls defined by industry,… (More)
This paper examines how the state of the economy when businesses begin operations affects their size and performance over the lifecycle. Using micro-level data that covers the entire universe of businesses operating in the U.S. since the late 1970s, I provide new evidence that businesses born in downturns start on a smaller scale and remain smaller over… (More)
—We measure unit value electricity prices using 2 million annual observations on U.S. manufacturing plants from 1963 to 2000. These prices display tremendous cross-sectional dispersion, 85–95% of which reflects differences by plant location and purchase quantity. Spatial differentials decline markedly until the late 1980s for large purchasers but rise over… (More)
A search and matching model, when calibrated to the mean and volatility of unemployment in the postwar sample, can potentially explain the unemployment crisis in the Great Depression. The limited responses of wages from credible bargaining to labor market conditions, along with the congestion externality from matching frictions, cause the unemployment rate… (More)
and two anonymous referees for helpful comments. We also benefitted from helpful comments by conference and workshop participants at the Bank of England, Mihram provided valuable research assistance. All remaining errors are our own. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of… (More)