We develop a dynamic asset pricing model of cryptocurrencies/tokens that allows users to conduct peer-to-peer transactions on digital platforms. The equilibrium value of tokens is determined by aggregating heterogeneous users' transactional demand rather than discounting cash flows, as is done...

A salient trend in crisis intervention has emerged in recent decades: Government and central banks offered funding directly to nonfinancial firms, bypassing banks and other credit intermediaries. We analyze the long-term consequences of such policies by focusing on firm quality...

Under financing frictions, negative shocks have a lasting impact on credit intermediaries' net worth and lending capacity. Anticipating tighter credit-supply conditions and the resulting difficulty in financing ongoing capital growth, firms' current incentives to borrow and create productive capital weaken....

When the value of a pledgeable asset (or project) is uncertain, investors are tempted to examine it. The information cost is ultimately borne by the asset owner, reducing her financing capacity. A pecking order emerges. Debt generates a greater financing...

Behavioral biases in investors' expectations can lead to a decoupling of asset prices from fundamentals, and risks to financial stability. Central bank communication could be a tool to mitigate these issues, but there is no theoretical guidance on how and...

I study the equilibrium behavior of wealth distribution in a dynamic model of financial markets with multiple groups of rational investors who may differ in their information sets, as well as a group of irrational investors with incorrect beliefs. The...