Corporate loans are one of the most important avenues of credit for firms. Whereas banks keep a fraction of these loans on their books, about half are sold on a secondary
over-the-counter loan market. Empirically, the size of this market is substantial and spreads therein are tightly correlated with real macroeconomic outcomes. We develop a general equilibrium, search-theoretic model with labor, credit, and financial secondary loan markets to study their linkages and the macroeconomic impacts of imperfections in these markets. We show analytically that the existence of a loan market dampens the volatility of unemployment and reduces its steady state level, whereas introducing a loan monitoring cost for banks raises steady state unemployment. Furthermore,
convex monitoring costs act as an automatic stabilizer. Numerically, we find that the existence of a loan market reduces steady state unemployment by 2.7pp and amplifies the propagation of real and credit shocks in the economy. Financial shocks in the loan market can have sizable effect on real variables.

This paper assesses wage setting and wage dynamics in a search and matching framework in which (i) workers and firms on occasion meet multilaterally and (ii) workers can recall previous encounters with firms. Given that firms cannot commit to future wages and that workers cannot commit to not searching on the job, the resulting progression of wages from firms paying just enough to keep their workers yields a compensation structure consistent with well established but difficult to reconcile observations on pay dynamics within jobs at firms. Along with wage tenure effects, serial correlation in wage changes, cohort effects, wage growth are negatively correlated with initial wages.

Using sales and leasing data, this paper finds three novel effects of a higher property transaction tax: higher buy-to-rent transactions alongside lower buy-to-own transactions, despite both being taxed; lower sales-to-leases and price-to-rent ratios; and longer time-on-the-market. This paper explains these facts by developing a search model with entry of investors and households who decide to own or rent. The transaction tax increases the demand for rental properties, which reduces the homeownership rate and homeowners’ mobility. The deadweight loss from the tax is large at 113% of revenue, with more than half of this due to the decision to own or to rent.

This paper studies the effects of financial frictions in construction on housing market dynamics. To this end, we build a search-theoretic model of the housing market in which there is endogenous entry of buyers and developers
face credit constraints. We capture credit frictions by assuming that developers must search for financing before building a home à la Wasmer and Weil (2004). Our model explores a novel channel that links credit frictions faced by developers to the housing market. We calibrate the model to quantify the size of the credit channel during the 2012–2019 housing market recovery. Through
a series of counterfactuals, our model predicts that the credit channel had a large impact on housing liquidity, construction, and the vacancy rate. Furthermore,
it accounts for around half of the rise in prices during the 2012-2019 housing market recovery.