a borrowing limit—and find that when the model must match the observed distribution of the growth rate of the output of individual firms, the contribution of market imperfections to TFP is rather small. In “Middlemen in Limit-Order Markets,” Jovanovic and Menkveld analyze the role of middlemen in asset markets who are assumed to have superior information and, hence, potentially improve the allo...

A basic assumption in labor economics is that changes in wages paid to new workers are distributed to existing workers. However, there is little evidence to support this assumption. This paper uses Brazilian matched employer-employee longitudinal data to identify new jobs, and then measures the responsiveness of wages paid to existing workers to the wages paid to new workers. This measure of re...

We show that frictions in labor and capital markets can be a source of competitive advantage for a¢ liates of corporate groups over standalone …rms in environments where bene…ts from internal markets’‡exibility are high. We argue that the advantage of ‡exibility in changing labor inputs is related to how di¢ cult it is to change capital inputs. We predict that if substituting labor with capital...

Using hand-collected data on CEO appointments during shareholder activism campaigns, this study examines the relation between activist involvement in recruiting and frictions hiring decisions. The results indicate that of CEOs who are recruited with influence associated more favorable stock market reactions stronger profitability improvements than without involvement. In contrast, I find little...

General financial models have become workhorse models in the fields of macroeconomics and finance. These models have been developed and extensively studied by general equilibrium theorists. What makes them so applicable for macroeconomics and finance is the well accepted fact that models with a representative agent and without financial frictions yield equilibrium outcomes that are inconsistent...

The literature on Foreign Direct Investment (FDI) has advanced several explanations of the links between financial market developments and FDI inflows across developing as well as developed countries. Empirical literature show that financial market development reduces informational frictions and improves resource allocation more efficiently. Also, financial systems are important for both produc...