Standard coordination games feature individual payoffs that are independent of the aggregate coalition size. This paper develops a framework for coordination games which can account for the role of competition. We characterize equilibrium outcomes under different information structures, allowing us to find a unique equilibrium strategy of global games without being restricted to settings of supermodularity. The model highlights the impact of crowding out in coordination games, wherein substitutability lowers individual payoffs from coordinating. In many common global game contexts, accounting for the crowding out of payoffs changes widely held intuitions on strategies, and on policy implications. For example, in the context of speculative currency attacks, selling a currency after receiving bad signals about reserves may no longer be a dominant strategy; in the presence of substitutability, setting a quota on how many speculators can attack may increase the chance of regime floating; currencies with potentially small depreciations but ample liquidity can be subjected to more pressure than currencies with potentially huge depreciation but low liquidity.

This paper attempts to understand exchange rate dynamics and potential drivers of excess return predictabilities in exchange rate markets. Using a board data sample, the paper finds that countries with higher contemporaneous interest rates earn initial excess positive bond returns. However, the sign of excess returns is a function of time. In the medium run, higher contemporaneous interest rates reverse to predict negative excess returns. Interest differentials have no excess return predictabilities in the long run. To reconcile these empirical patterns, I propose that investors not only rely on fundamentals (interest differentials) but also extrapolate past exchange rates when forming expectations of future exchange levels. The proposed extrapolative model can reconcile excess return patterns as observed in the data as well as is consistent with survey evidence from investor forecasts.

Recent empirical evidence of a downward-sloping term structure of equity risk in \cite{van2012timing} and \cite{van2013equity} challenges many leading asset pricing models. This paper reassesses empirical facts using different sources of dividend data across many equity indices and proposes the supply-based asset pricing model as an alternative theory. In particular, we argue that localized market participation in financial activities partially explains the term structure and time variation of implied equity dividends. Equity derivative products are major sources of dividend supply shocks, resulting in the variation in implied dividends across time and across equity indices. Using issuance data, we show that the implied index dividend term structure is somewhat sensitive to structural flows from equity structured product issuance.