Can Intangible Capital Explain Cyclical Movements in the Labor Wedge?

Cyclical Movements along the Labor Supply Function

Can We Explain Banks' Capital Structures?

www.philadelphiafed.org While this view appears plausible, it actually contradicts the evidence of the last 20 years, which shows that banks do not appear to hold the minimum amount of equity required by regulators. Furthermore, while banks are typically highly leveraged compared with most nonfinancial firms, this doesn’t mean that similar forces are not at work when banks and nonfinancial firm...

Reconciling Cyclical Movements in the Marginal Value of Time and the Marginal Product of Labor

Recessions appear to be times when the marginal rate of substitution between goods and workers’ time falls below the marginal product of labor. If so, the allocation of workers’ time is inefficient. I develop a model of households and production that reconciles cyclical movements in the marginal value of time and the marginal product. The model embodies the findings of research that the Frisch ...

Can the Pecking Order Explain the Costs of Raising Capital?

The pecking order hypothesis predicts that equity costs exceed debt costs when managers require outside funding. Asymmetric information costs motivates this hypothesis. I use an econometric model to estimate issuance costs managers face to test the prediction and motivation of the pecking order. The estimates challenge the existence of a pecking order. First, debt costs increase from about 50% ...

Measuring Intangible Capital with Uncertainty

Intangible capital has arguably become an important component of corporate value. However, it is still an open question whether uncertainty associated with investment in intangible capital is higher or lower than physical capital. We estimate the value of intangible capital in a dynamic stochastic general equilibrium model that features capital adjustment costs, investment-speci c technological...