Roc Armenter : Research

with Viktoria Hnatkovska.

The U.S. non-financial corporate sector became a net lender vis-a-vis the rest of the economy in the early 2000s. We document this fact in the aggregate and firm-level data. We then develop a structural dynamic model with investment to study the firms' financing decisions. Debt is fiscally advantageous but subject to a no-default borrowing constraint. Equity allows the firm to suspend distributions to shareholders when the cash flow is negative.

Experimental Economics, 10 (3), 2007, pp. 221-234. With Antonio Cabrales and Rosemarie Nagel.