Debt and Deficits: Fiscal Analysis with Stationary Ratios
We introduce a measure of a government’s fiscal position that exploits cointegrating relationships among fiscal variables. The measure is a loglinear...
The paradox of perfect supervision
Each financial crisis brings more financial supervision, more models and larger buffers – but still fragility persists. The paradox of perfect...
The Drivers and Implications of Retail Margin Trading
Using granular data covering both regulated (brokerage-financed) and unregulated (shadowfinanced) margin accounts in China, we provide novel evidence...
How financial authorities best respond to AI challenges
Artificial intelligence is transforming finance faster than the authorities can adapt. This column argues that while AI enhances the financial system...
Relative Basis and the Expected Returns of Commodity Futures
We propose a novel measure, dubbed “relative basis,” to better capture the commodity convenience yield. Our measure is the difference between the...
Boards of Banks
Bank board directors are highly independent but possess limited prior banking experience. Using a sample of banks from 90 countries between 2000 and...
Research highlight
A Preferred-Habitat Model of Term Premia, Exchange Rates, and Monetary Policy Spillovers
American Economic Review, 115(11), 3788–3824
Behind the Corporate Veil: How Business Groups Arbitrage ESG Disclosure Mandates
We examine how ESG disclosure mandates introduced in the headquarters countries of business groups affect the ESG performance of both parent companies...
Of AI bubbles and crashes
Warnings of an AI stock market bubble abound. Should investors and policymakers be concerned? This column argues that innovation-driven bubbles can...
Talk and the City: How Far to Trust Bankers (Not) Calling for Bailouts?
To evaluate a bank’s resilience to financial stress, authorities often rely on private information from a peer institution, or counterparty. This...
Research highlight
Passive Investing and the Rise of Mega-Firms
The Review of Financial Studies, hhaf085
The Tragedy of Complexity
Complexity can create value. At the same time, understanding more complex goods requires more of an agent’s attention. We show that equilibrium...
Forecasting Crashes with a Smile
We derive option-implied bounds on the probability of a crash in an individual stock, and argue a priori that the lower bound should be close to the...
