FRIC/Finance Seminar with Toni Whited, University of Michigan
FRIC Center for Financial Frictions and the Department of Finance are proud to announce the upcoming seminar with Toni Whited, Ross School of Business, University of Michigan.
Toni Whited will present
Labor and Capital Dynamics under Financing Frictions
Ryan Michaels, Federal Reserve Bank of Philadelphia
T. Beau Page, C.T. Bauer College of Business, University of Houston
Toni M. Whited, Ross School of Business, University of Michigan
This paper integrates a model of rich firm-level dynamics, including factor adjustment frictions and wage setting, with a theory of costly debt and equity financing. The theory can confront a variety of empirical moments relating to the cross sections of debt, employment growth, and capital investment. The model is estimated by method of simulated moments. The estimation makes use of a new quarterly panel dataset that links a firm's investment and financing decisions to its employment and wages. Using the estimated parameters, we assess the model's ability to replicate recent reduced-form evidence on the effects of financing frictions on capital and labor demand.