We propose new evidence on the causal links between bank lending and job losses. We analyze the interplay between limited pledgeability and labor market imperfections. We show that firms hold liquid assets precautionary to protect its workers and hence its search capital. We show that if labor market frictions disappear, so does the motive for firms to hold liquid assets.

Financial constraints in search equilibrium: Mortensen and Pissarides meet Holmstrom and Tirole

BOERI, TITO MICHELE;GARIBALDI, PIETRO;
2018

Abstract

We propose new evidence on the causal links between bank lending and job losses. We analyze the interplay between limited pledgeability and labor market imperfections. We show that firms hold liquid assets precautionary to protect its workers and hence its search capital. We show that if labor market frictions disappear, so does the motive for firms to hold liquid assets.
2018
2017
Boeri, TITO MICHELE; Garibaldi, Pietro; Moen, Espen M.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/3998159
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