Risk-free interest rates and the VIX index comove negatively on average, as predicted by precautionary savings. But this comovement turns positive on FOMC days. This pattern is consistently observed across a diverse array of risk-free interest rates, including nominal, real, swap, short-term, and long-term rates. Our high-frequency analysis reveals that the positive impact of monetary policy shocks on financial market risk drives this result. We provide an explanation for these findings in a model where levered investors akin to financial intermediaries hold and price a risky asset, such as equity. Upon an unexpected positive monetary policy shock, equilibrium interest rates and levered investors' borrowing costs increase persistently. This raises investors' leverage and the volatility of stochastic discount factor, leading to lower risk appetite and amplified financial market risks.

We study how factor market competitors' investment demand sensitivity to interest rates affects the transmission of interest rate fluctuations to firms' growth. Using U.S. zip code data, we find that in areas with higher average cash flow duration of local firms, the positive impact of lower interest rates on firm growth is weakened due to rising commercial real estate prices. This effect is driven by zip codes with low land supply elasticity. Our findings suggest that the transmission of interest rate shocks is not solely determined by a firm's own attributes but also by competitor characteristics in the factor market.

How to measure the intensity of talent market competition and how does the competition affect firm growth? This research constructs a new measure of firms' talent retention pressure based on other firms' job postings for talent in the local market. We show that talent market competition substantially dampens firms' capital investment. The effect is primarily on laggard firms' investment but not superstars', leading to a limited impact on aggregate U.S. investment but increased industry concentration.

Lower income households have experienced higher inflation since the 2000s. I find that households who experience a rise in inflation (relative to national inflation rates) increase their borrowing from the mortgage market and holdings of housing assets. Empirically, I identify this effect by exploiting variations in relative inflation caused by exogenous shocks in exchange rates, since lower income households spend a greater share of their income on tradable goods. These findings can be explained by households relocating their savings to markets in which real returns are protected from relative inflation. A calibrated general equilibrium model suggests a smaller dispersion in home ownership between income groups but a greater dispersion in welfare, as a result of inflation heterogeneity.

Employees often supply labor to firms first and then get paid later. This paper shows that such implicit labor trade credits or short-term borrowing are important for both firms and employees. Using state payday frequency reforms between the 1860s and the 1930s, I find that firms reduced employment after being required to pay employees more frequently, which reduced the amount of borrowing from employees. However, the employees who remained employed were more productive and earned higher wages. Despite decreased labor demand, households, on average, were better off as demonstrated by an increase in home ownership, especially those households that are typically severely financially constrained, such as low-income minorities and females.

We study the role of firm boundaries in facilitating fraud in the production process. Using acquisition events between broker/dealer banks and mortgage lenders as shocks to local mortgage markets, we find vertical integration resulted in riskier mortgage lending practices both ex-ante and ex-post, accompanied by an increase in product misrepresentation.