A number of recent papers argue that financial frictions arising from limited commitment problems can explain large cross-country income differences. We argue that different micro financial underpinnings have potentially very different implications at both the macro and the micro level. To this end, we develop a general equilibrium framework that encompasses different regimes of frictions, and ...

The recent financial crisis has shown that financial frictions such as asset bubbles and liquidity spirals have important consequences not only for the financial sector, but also more generally for the macro economy. It forces economists to reevaluate firmly held beliefs about market efficiency, as well as convictions about the appropriate regulation of financial markets and approaches to macro...

Tyler Ransom is an assistant professor of economics at the University Oklahoma and a research affiliate IZA (ransom{at}ou.edu).

This paper develops an endogenous growth model with labor market matching and technology adoption. While labor market search and entry frictions lengthen technology diffusion, exogenous technology arrival may creatively destruct jobs in the short run. Such interrelationships give rise to multiple equilibria (global and local indeterminacy) under which a small autonomous technological improvemen...

Incorporating financial intermediaries, with their ability to generate shocks and frictions, into macroeconomic models has recently gained substantial attention of the profession. In this commentary I ask whether the models we generated are ripe to provide valuable, quantitative advice to policymakers, especially those interested in implementing and conducting macroprudential policy. I concentr...

I present an equilibrium search model of the labor market in which workers send multiple applications and firms can interview multiple applicants. The potential number of interviews is determined by an ex ante investment in a recruitment technology. A better technology is more costly, but serves two purposes: it increases the probability that the firm will identify an applicant that is qualifie...