CEMLAâ€™s Research Webinars, March 28 at 12:00 hours US Eastern Daylight Saving Time (EDT)

Dear colleagues,

This week CEMLA’s research webinar will have the presentation by:

François Gourio a research economist at the Federal Reserve Bank of Chicago, who studies business cycles, asset prices, investment, and firm dynamics. His work on “Credit Risk and Disaster Risk” was awarded in 2015 the Best Paper Prize in the American Economic Journal: Macroeconomics. In tomorrow’s webinar François Gourio will talk about "Financial Distress and Endogenous Uncertainty".

Abstract:

What is the macroeconomic effect of having a substantial number of firms close to default? This paper studies the effects of financial distress in a model where customers, suppliers and workers suffer losses if their employer goes bankrupt. I show that this mechanism generates amplification of fundamental shocks by creating a cyclical TFP and labor macroeconomic wedges. Because the strength of this amplification depends on the share of firms that are in financial distress, it operates mostly in recessions, when equity values are low. This leads macroeconomic volatility to be endogenously countercyclical. Moreover, the cross-sectional dispersion of firms outcomes is also endogenously countercyclical. Empirical evidence consistent with the model is provided.

The webinar will be broadcasted on Tuesday at 12:00 hours US Eastern Daylight Saving Time (EDT), through the link: https://cemla.adobeconnect.com/research.

The schedule for 2016 and most of the recordings of the 2014 and 2015 webinars are available at the CEMLA's Research Webinars Web Page.

For comments or questions please contact CEMLA's Research Division:
Alberto Ortiz, Manager (ortiz@cemla.org).