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This paper examines how heterogeneous capital pledgeability shapes capital allocation. I first document, using French firm-level data, that firms holding more pledgeable capital are structurally more leveraged and display greater sensitivity of investment to credit supply shocks. I then incorporate heterogeneous capital pledgeability into a general equilibrium model with collateral constraints. This feature creates sectoral capital misallocation: high-pledgeability capital is less costly to accumulate and thus yields lower expected returns than low-pledgeability capital, both in steady state and in response to credit supply shocks. I estimate the model based on a simple distinction between commercial real estate and other types of capital goods, the former being more pledgeable. I then show that capital misallocation is substantial over the credit cycle. Because these capital goods are imperfect substitutes and firms face a unique interest rate, redistributive credit policies taxing debt issued by high-pledgeability firms while subsidizing that of less pledgeable firms raise welfare, particularly when implemented during a credit expansion.

Since 2022, the equity premium in the US has experienced a sharp decline, reversing its secular increase over the previous two decades. This paper builds and estimates a general equilibrium model to assess the structural drivers of this phenomenon. Beyond standard channels such as shifts in risk aversion or in financial constraints, I find that the drop in bond convenience yields played an important role: by diluting the share of bondholders on the liability side of corporate balance sheets, it reduced the risk borne by equity holders.

In 2021, euro area inflation surged, prompting the European Central Bank to reverse its monetary stance. This paper argues that this shift did not generate significant financial stress, partly because of the bank capital requirements introduced in the 2010s. We develop a framework to assess their effects over the business cycle. Although capital requirements remained broadly stable, they shaped the transmission of the structural shocks underlying this episode. We find that while these requirements modestly constrained post-Covid growth, they successfully prevented the materialization of risks. Overall, capital requirements strengthened the economy’s resilience to adverse shocks at a relatively low macroeconomic cost.

In the follow-up to the 1926 political and monetary crisis in France, a new government led by Raymond Poincaré attempted to restore monetary stability by restructuring public debt. A sinkinfund was missioned to withdraw short-term public bills from money markets. This policy disorganized the largest Parisian banks of the time, as they relied on these bills to manage their liquidity. Without developed domestic money markets, no other asset could absorb the excessliquidity freed by the withdrawal of these bills, and these leading banks faced a low-rate environment. In search of yield, they expanded their activities abroad a few months before the 1929 crash. These findings renew our understanding of the expansion of France's banking sector in the 1920s. In addition, they shed new light on the role of public debt in financial stability in an open economy.