Doubling Down on Debt: Limited Liability as a Financial Friction

We investigate how a combination of limited liability and preexisting debt distort firms’ investment and equity payout decisions.

Eigenvalues and Eigenvectors of Tau Matrices with Applications to Markov Processes and Economics

In the context of matrix displacement decomposition, Bozzo and Di Fiore introduced the so-called $\tau_{\epsilon,\phi}$ algebra, a generalization of the more known $\tau$ algebra originally proposed by Bini and Capovani. We study the properties of …

A Model of Product Awareness and Industry Life Cycles

This paper proposes a model where consumption bundle heterogeneity is derived from a network of connections between consumers and firms. In it, consumers slowly become 'aware' of differentiated products, adding connections and expanding their choice sets.