Institutional Constraints on Endogenous Growth
This paper argues that endogenous growth requires not merely savings and investment, but institutions that ensure investment is productivity-enhancing...
Research highlight
Corporate Bond Multipliers: Substitutes Matter
The Review of Financial Studies, hhag082
Demand Elasticity in Dynamic Asset Pricing
The demand-system approach identifies asset demand slopes using residual supply shocks, presuming these shocks move expected returns but not risk. In...
On the Moments of the Stochastic Discount Factor
We derive new bounds on arbitrary moments of the stochastic discount factor (SDF) that exploit the gap between the true and risk-neutral return...
Cryptocurrency’s Inflation Tax and the Black Banking Solution: An OLG Approach
This paper develops an overlapping generations model to analyse the inflationary consequences of introducing cryptocurrency alongside fiat money in an...
Market-Based Liquidity Transformation
We develop a theory of liquidity transformation performed by market participants. An in-kind wrapper (e.g., a corporate bond ETF), issued by a fee...
Causal Inference for Asset Pricing
Portfolio choice involves substituting across many assets at once, complicating inference about asset demand. An elementary condition often captures...
The Option Value of Waiting for Institutional Improvement: Real Options and Growth with Endogenous Beliefs
This paper explains why institutional reforms often fail to stimulate investment despite improving long-run fundamentals. We develop a real options...
Bayesian Fama-MacBeth Regressions
Commonly used frequentist estimation methods for linear factor models of asset returns are invalidated by weak and spurious factors. The problem is...
Purifying the Equity Premium
The equity premium has conventionally been defined as the return on stocks minus the return on bills. We decompose this conventional definition into...
Strategic Misreporting and Investment Distortions: How Agency Costs Shape Project Selection and Timing
This paper introduces a dynamic model of corporate investment that integrates misreporting incentives with leverage and growth option timing. Unlike...
Market Fragmentation: Liquidity, Price Discovery, and Welfare
We analyze the impact of financial market fragmentation when traders differ in terms of market access and information about the asset payoff. Agents...
Super-Pledgeability: How Progressive Taxation Solves Entrepreneurial Commitment Problems
This paper provides a novel efficiency rationale for progressive corporate taxation based on commitment problems in entrepreneurial finance. Poor...
Safe Assets as Balance Sheet Multipliers
We highlight the multiplier role of (public) safe assets by studying a model of a bank’s balance sheet. The bank optimally constructs a portfolio of...
Copayments and the Value of Health Insurance: Experimental Evidence from Uganda
How do copayments affect the benefits and costs of health insurance in low-income settings? We study this question in a field experiment in rural...
Market Structure of Intermediation
Skilled intermediaries can represent multiple investors, generating economies of scale in screening costs. However, locating competent intermediaries...
