Standard theory implies that the discount rates used by firms in investment decisions (i.e., their required returns to capital) determine investment and transmit financial shocks to the real economy. However, there exists little evidence on how firms' discount rates change over time and affect...

We show that firms' nominal required returns to capital (i.e., their discount rates) are sticky with respect to expected inflation. Such nominally sticky discount rates imply that increases in expected inflation directly lower firms' real discount rates and thereby raise real investment. We...

Large-scale financial and macroeconomic shocks directly affect some firms and households and indirectly impact others through general equilibrium spillovers. In this paper, I describe how researchers can estimate spillovers directly using quasi-experimental or experimental variation. I then...