Four essays in microeconomics.

Authors Publication date
2009
Publication type
Thesis
Summary A forced asset sale occurs when a firm needs to sell assets to generate cash and, because potential buyers face financial constraints, assets are traded at a price below fundamental value. In the first chapter, I show that a policy designed to support asset prices aggravates agency problems within firms. In the second, I establish that asset prices in the decentralized economy are socially too low if liquidity shocks dominate, but are too high if solvency shocks are prevalent. In the third chapter, co-authored with David Thesmar, we show using a theoretical model that we test on hedge fund data, that funds with contractual provisions limiting outflows, such as lock-in periods, buy assets when the rest of the industry experiences outflows and must liquidate their positions.
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