University of Notre Dame
Department of Economics
3033 Jenkins Nanovic Hall
Notre Dame, IN 46556


Curriculum Vitae

Working Paper

“Borrowing to Save and Investment Dynamics” November 2018

Existing literature on financial frictions argue that firms reduce investment in a crisis due to a lack of credit. However, U.S. public firms, which together accounted for 89% of the decline in investment during the Great Recession, experienced no drop in borrowing. Instead of investing, they borrowed to expand their stock of safe assets; that is, they borrowed to save. I argue that this is an optimal portfolio choice when firms face gradually resolving uncertainty. In a quantitative general equilibrium model with heterogeneous firms, I show that borrowing-to-save is a mechanism that can simultaneously generate a sharp downturn and a slow recovery.

Work in Progress

“The Behavioral Financial Accelerator (with Antonio Falato)