Yuhao Qian 钱俣皓

Does the form of borrowing constraints matter for aggregate productivity? Roughly 80% of U.S. corporate borrowing is earnings-based, yet most theories of financial frictions and capital misallocation use borrowing constraints with asset-based limits. I exploit the Enron–Arthur Andersen accounting scandal, which caused a sharp decline in earnings-based borrowing, to provide the first natural-experiment evidence on the causal effects of earnings-based financial frictions on capital misallocation. A 10-percentage-point decline in the share of new debt subject to earnings-based constraints widens the gap in the growth of marginal revenue product of capital between initially high- and low-MRPK firms by 7.7 percentage points, indicating a deterioration in capital allocative efficiency. A heterogeneous-firm general-equilibrium model provides the intuition: conditioning borrowing capacity on earnings directs capital toward high-productivity, low-asset firms because earnings proxy productivity more closely than asset values do. Quantitatively, the Enron shock lowers aggregate TFP by 0.6%, whereas an asset-based tightening that generates the same contraction in aggregate borrowing among firms with positive borrowing lowers TFP by only 0.3%. Thus, the composition of borrowing constraints has first-order consequences for allocative efficiency.

This paper studies why euro-area countries differ in their consumption responses to U.S. monetary policy shocks. Using country-level local projections, I first show that identified U.S. monetary policy shocks generate significantly heterogeneous consumption responses across euro-area countries. I then link this heterogeneity to household balance-sheet composition using microdata from the ECB's Household Finance and Consumption Survey. The correlation between countries' fraction of wealthy hand-to-mouth households (WH2M) and consumption responses to expansionary U.S. monetary policy shocks reaches approximately 0.75 and is statistically significant. This finding is consistent with a central prediction of open-economy heterogeneous-agent New Keynesian (HANK) models. Finally, using BIS data on banks' cross-border positions, I show that this relationship also depends on external currency exposure: among high-WH2M countries, responses vary with the currency composition of net cross-border positions. The findings imply that domestic household heterogeneity and external financial structure jointly shape the international transmission of U.S. monetary policy.