Staff Report 538
Appendix for Financial Frictions and Fluctuations in Volatility
Published December 8, 2016
This appendix contains ﬁve sections. Section 1 provides details for the comparative statics exercise performed in the simple example. Section 2 discusses extending the model to allow ﬁrms to default on the wages for managers. Section 3 describes the ﬁrm-level and aggregate data. Section 4 contains the details of the computational algorithm. Finally, Section 5 reports the results for our model with a lower labor elasticity.
Download Paper (pdf)