The continuing financial fragility of banks
Banks remain fragile, which could be reduced if they held more equity and less debt. Bankers, however, fear this could affect their compensation...
How a regulated utility innovates without breaking things
Safety and stability are essential for public utilities. But they face pressure to innovate to keep up with technological innovation, environmental...
Scale or Yield? A Present-Value Identity
We propose a loglinear present-value identity in which investment ("scale"), profitability ("yield"), and discount rates determine a firm’s market-to...
Upstreamness and downstreamness in input-output analysis from local and aggregate information
Ranking sectors and countries within global value chains is of paramount importance to estimate risks and forecast growth in large economies. However...
How the financial authorities can take advantage of artificial intelligence
Artificial intelligence will both be of considerable help to the financial authorities and bring new challenges. This column argues the authorities...
The Impact of Green Investors on Stock Prices
We study the impact of green investors on stock prices in a dynamic equilibrium model where investors are green, passive or active. Green investors...
Polarized Expectations, Polarized Consumption
This paper argues that political affiliation plays a central role in shaping household expectations and consumption behavior. Using survey and...
Chinese Debt Capital Markets - An Emerging Global Market with Chinese Characteristics
With the deepening of China's reform and opening up, and the sustained development of the Chinese economy, the Chinese bond market has become an...
When risk models hallucinate
Risk model hallucination happens when models are forced to forecast the likelihood of extreme events in cases where they have not been trained with...
Dynamic industry uncertainty networks and the business cycle
Journal of Economic Dynamics and Control, 159, 104793
Centralized vs Decentralized Markets: The Role of Connectivity
We consider a setting in which privately informed agents are located in a network and trade a risky asset with other agents with whom they are...
Collateral Effects: The Role of FinTech in Small Business Lending
This paper investigates the impact of introducing junior unsecured loans (i.e., FinTech loans) in the small business lending market. Using French...
The Gender Gap in Household Bargaining Power: A Revealed-Preference Approach
When members of the same household have different risk preferences, whose preference matters more for investment decisions and why? We propose an...
How AI can undermine financial stability
As artificial intelligence makes inroads into the financial system, it exacerbates existing channels of instability and creates new ones. This column...