 In our work, we use a natural experiment and microdata to study the employment effect of credit shocks. We find that credit matters for the accumulation of human capital in firms. The implication is that financing frictions can affect firms' long-term productivity and growth. GDP fell 15% behind trend in the aftermath of the global financial crisis. I provide causal evidence that the crisis led to a sharp reduction in R&D. This led to a slowdown of productivity growth, which explains a third in the shortfall of output to date. The fiscal policy response to the financial crisis in the United States included both conventional stimulus and financial sector interventions. I study these response by combining data and the structural macro model, and find that tools such as transfers to households and bank recapalizations were the most effective due to new channels that are active during financial crisis. Many countries are engaging fiscal consolidations due to rising government debt. Structural tax increases appear to be setting the fitting and deliver a higher debt ratio. Instead, expenditure cuts have a less pronounced effect on GDP growth and are able to stabilize debt. Leasing disinflation and slow recovery are two features of the great recession that are hard to address with standard macroeconomic models. By allowing for an explicit role for inflation expectations, I demonstrate that the interaction between expectations and policy is a key determinant of macro outcomes. I revisit the Mendelian idea that labor mobility is an important stabilizing force in a currency union. Empirically, I show that housing markets overturn this result, implying that migration amplifies local shocks and increases regional inequality. Central counterparties are systemically important, but many of them operate as profit-driven firms that create potential conflict between private incentives and public interest. My model suggests to have different capital regulation for central counterparties with different ownership structures. I document large increases in external financing, investment and employment due to the EU's financial services action plan. These findings have important policy implications for the capital markets union and the Brexit negotiations. The credit booms we experienced in recent decades were associated with investment in low-productivity sectors of the economy such as housing. I will show how these factors misallocation can be explained by the emergence and not the burst of a rational credit bubble and what a monetary and regulatory authority can do to prevent this. In our paper, we show theoretically and empirically that increased financial frictions can lead to anti-competitive effects hindering the relocation process usually ensuing after a crisis. As a bonus, we also offer you a new structural measure of credit constraints at the firm level.