For further details please see Workshops & Conferences.

Information Externalities in Corporate Governance

Estimating Risk Preferences from a Large Panel of Real-World Betting Choices

Estimating the Effects of Incentives When Workers Learn about Their Ability

Optimal Certification Design

Information Production in the Process of Securitization

Do Mutual Fund Brokers Exploit Investors Through Their Fee Schedules?

Expectations as Endowments: Evidence on Reference-Dependent Preferences from Exchange and Valuation Experiments

International Liquidity Sharing: Evidence from Financial Crises

Ambiguity Shifts and the 2007-2008 Financial Crisis

Expected Returns and Dividend Growth Rates Implied in Derivative Markets

Business Networks, Production Chains, and Productivity

Non-Exclusive Competition in the Market for Lemons

Selection on Observables and Bias from Unobservables: With Applications to the School Choice Literature

Selection on Observables and Bias from Unobservables: With Applications to the School Choice Literature

Identifying Sibling Influence on Teenage Substance Use

Selection on Observables and Bias from Unobservables: With Applications to the School Choice Literature

The Folk Theorem for Irreducible Stochastic Games with Imperfect Public Monitoring

Wage and Price Rigidities

Financial Constraints and Firm Dynamics

ExtrapoLATE-ing: External Validity and Overidentification in the LATE Framework

Credit Default Swap Spreads and Systemic Financial Risk

Rethinking the Effects of Financial Liberalization

Behavioral Pricing

Abstract:

A field experiment (N = 113,047 participants) manipulated two factors in the sale of souvenir photos. First, some customers saw a traditional fixed price, whereas others could pay what they wanted (including $0). Second, approximately half of the customers saw a variation in which half of the revenue went to charity. At a standard fixed price, the charitable component only slightly increased demand, as similar studies have also found. However, when participants could pay what they wanted, the same charitable component created a treatment that was substantially more profitable. Switching from corporate social responsibility to what we term shared social responsibility works in part because customized contributions allow customers to directly express social welfare concerns through the purchasing of material goods.

Post-Secondary Attendance by Parental Income in the U.S. and Canada: What Role for Financial Aid Policy?

Time’s Arrow in Macroeconomic Models

Abstract:

We show that U.S. inflation depends more on the future than on the past in a range of estimated macroeconomic models. This non-causality result is problematic for macroeconomists trained in causal models, since they assume by definition that inflation only depends on current shocks and past information. Even models with rational forward-looking agents are causal as expectations are themselves only a function of the past. Our finding that U.S. inflation data prefers time to run backwards suggests that the models we estimate are misspecified. The focus of this paper is the econometrician’s information set. We show that inflation depends more on the future than the past if the information set of the econometrician does not span that of firms in the economy. To combat this missing variable problem we expand the information set of the econometrician to include measures of the output gap, interest rates, and factors identified as principal components of a large dataset of economic indicators. The resulting Phillips curve and factor-augmented vector autoregression models still show strong dependency of U.S. inflation on the future. We therefore conclude that non-causal inflation is pervasive and firms know a lot more about the future than we typically assume.

A Comparison of Forecasting Procedures for Macroeconomic Series: The Contribution of Structural Break Models

Matching Estimation

Risk vs. Social Preferences

Spatial Sorting

Evaluation of Active Labour Market Policy

Labour Market Effects of Individual Sports Participation

Exponential Conditional Volatility Models

Banks and Development: Jewish Communities in the Italian Renaissance and Current Economic Performance

Investing in Schooling in Chile: The Role of Information about Financial Aid for Higher Education

Gender Discrimination in Job Ads: Theory and Evidence

Over The Cliff: From the Subprime to the Global Financial Crisis

Bankruptcy: Is It Enough to Forgive or Must We Also Forget?

Dynamic Aspects of Teenage Friendships and Educational Attainment

Selection Effects in Insurance Markets with Unobservable Types

ABSTRACT:

A number of empirical studies of insurance markets have found nega- tive risk-coverage correlation, and named this phenomenon advantageous selection. An explanation of this puzzle is the existence of multiple sources of private infor- mation. Understanding the structure of private information is key for assessing the operating of insurance markets. In this paper we analyze selection effects by modeling a finite number of heterogeneous types, and using recent advances in finite mixture modeling, we discuss how risk and coverage probabilities can be identified and estimated for the unobserved types. These estimates can be used to test for selection effects, to give an approximate measure of the relative welfare loss from private information, and for policy analysis. To show the applicability of our approach, we look at the US long-term care and Medigap insurance markets. In both markets we find that there is significant evidence of residual heterogeneity, that the standard Rothschild-Stiglitz adverse selection model is not supported by the data, and private information causes significant inefficiency, especially in the heavily regulated Medigap market.

Unconventional Fiscal Policy at the Zero Bound

Estimation of Nonparametric Models with Simultaneity

Fiscal Policy Challenges and Sovereign Default in Advanced Economies

Optimal Regulation in the Presence of Reputation Concerns

Demand and Supply Effects in the Determination of Firm Performance

Dynamic Games with Asymmetric Information: A Framework for Empirical Work

Migration and the Welfare State: A Dynamic Political-Economy Theory

Unemployment and Productivity in the Long Run: the Role of Macroeconomic Volatility

The Equity Premium: Why Is It a Puzzle

The Cyclical Behavior of the Price-Cost Markup

Credit Market Competition and Interbank Liquidity (joint with Agnese Leonello)

Abstract

We develop a model in which credit market competition affects banks’ liquidity holdings and thus financial stability. Banks can trade loans on the interbank market to satisfy their stochastic liquidity demands. Two types of equilibria exist. In the no default equilibrium, banks keep enough reserves and do not default. In the mixed equilibrium, banks trade loans on the interbank market and some default with positive probability. The existence of these equilibria depends on the degree of credit market competition. We show that when competition is intense, only the no default equilibrium exists. When it is not, only the mixed equilibrium exists. Thus, competition is detrimental to financial stability.

Collateral Crises

Private Placements to Owner-Managers: Theory and Evidence

Indirect Effects of a Policy Altering Criminal Behaviour: Evidence from the Italian Prison Experiment

Equilibrium Intermediation and Resource Allocation With a Frictional Credit Market

News Shocks and the Term Structure of Interest Rates: a Challenge for DSGE Models (joint with Chris Otrok, University of Virginia)

Abstract:

News shocks about future increases in Total Factor Productivity (TFP) lead to a large and persistent drop in inflation and the Federal Funds rate while driving up the slope of the term structure of interest rates (Kurmann and Otrok, 2010). In this paper, we first show that a monetary DSGE model with a standard parametrization along the lines of Smets and Wouters (2007) is unable to replicate these dynamics. We then formally estimate the model with a limited-information procedure that is designed to match as closely as possible the impulse responses of key macroeconomic aggregates, inflation and the term structure to TFP news shocks. When we restrict parameters to economically meaningful values, the model is unable to generate the large drop in inflation and the Federal Funds rate that causes the slope of the term structure to increase. This failure to quantitatively account for the impact of TFP news shocks represents a challenge for modern DSGE models because TFP news shocks explain a significant portion of the variation in inflation, the Federal Funds rate and the term structure of interest rate as well as medium-run fluctuations in future real activity.

Quantile Regression with Censoring and Endogeneity

Contracts

Diversification through Trade

Contracts

Aggregate effect of monetary shocks in sticky price models based on fixed menu cost

The Political Economy of Public Debt

Aiding Conflict: The Unintended Consequences of U.S. Food Aid on Conflict

Aggregate effect of monetary shocks in sticky price models based on fixed menu cost

The Political Economy of Public Debt

Principles of Optimal Taxation

Bank Type and Lending to ‘Good’ Firms at Difficult Times: Evidence from the Current Crisis

Abstract:

This paper investigates empirically the link between bank type (size) and the ability to lend to ‘good’ firms. By ‘good’ firms we mean those with good economic fundamentals and prospects, proxied by TFP. The ability of the banking sector to allocate capital efficiently along this dimension has not been investigated in the literature. We document that TFP helps to predict firm’s profitability. Our analysis focuses on the 6-month period after Lehman, when credit availability became key for the survival of economically-sound firms in financial trouble. By using data at the bank-firm level for Italy, we document that the response of credit supply to borrowers’ economic fundamentals was significantly stronger for the largest banking groups than for smaller banks. These results are strengthened for the subsample of firms that were undergoing financial difficulties as reflected by bad credit scores.

Principles of Optimal Taxation

Dynamic theoretical models in political economy

The Glass Ceiling in Experimental Markets

From Hyperinflation to Stable Prices: Argentina’s Evidence on Menu Cost Models

Dynamic theoretical models in political economy

Models that combine heterogeneous producers (entrepreneurs) and financial frictions

Culture and Economics

Civic Capital and Democracy in the Long-run

Models that combine heterogeneous producers (entrepreneurs) and financial frictions

Culture as Learning

Competing for Customers: A Search Model of the Market for Unsecured Credit (joint with Lukasz Drozd)

Models (and data) of unsecured borrowing default under incomplete markets

Traditional and Shadow Banking

ABC on Deals (with Maros Servatka & Radovan Vadovic)

Abstract:
We propose a framework for analyzing agreements in strategic settings, be they informal or binding. We then develop, and experimentally test, a specific model formulated within the framework.

Models (and data) of unsecured borrowing default under incomplete markets

Traditional and Shadow Banking

Women’s Rights and Development

Models of innovation, firm dynamics, and international trade

Liquidity Effects in the U.S. Corporate Bond Market

The Optimum Quantity of Money with Borrowing Constraints (joint with Francesco Lippi)

Models of innovation, firm dynamics, and international trade

Liquidity Effects in the U.S. Corporate Bond Market

Revolution and Industrialization in Russia through the Lens of Neoclassical Growth Theory (joint with Anton Cheremukhin, Sergei Guriev and Aleh Tsyvinski)

For further details, please see Scientific Events.

For further details, please see Scientific Events.

For further details, please see Scientific Events.

Firm Microstructure and Aggregate Productivity

Information Aggregation and Transmission

Relationship Lending in a Financial Turmoil

Firm Microstructure and Aggregate Productivity

Information Aggregation and Transmission

The Great Escape? A Quantitative Evaluation of the Fed’s Non-Standard Policies

Commercial Imperialism? CIA Interventions and Trade During the Cold War

Reallocation and Productivity

Trade and inequality

Psychological Games: Theory & Experiments

Idea Flows, Economic Growth, and Trade

Trade and inequality

Experimental Asset Markets

The Free Rider Problem: a Dynamic Analysis

Aggregate Implications of Innovation Policy

Persistent Liquidity Effect and Long Run Money Demand

Importing Skill Biased Technology

Conflict in Sequential Innovation

On the Voluntary Exchange of Favors

Wealth and Volatility

Germs, Social Network and Growth

Incomplete Information and Menu Costs

Information Insensitive Securities: the Benefits of Central Counterparties

Financial Markets and Unemployment

Spontaneous Discrimination

Resuscitating Long-run Restrictions

Price Setting with Menu Cost for Multi-Product Firms

Government Policy and the Dynamics of Market Structure: Evidence from Critical Access Hospitals

The Causal Effect of Bankruptcy Law on the Cost of Finance

Clashing Theories: Why Is Unemployment So High When Interest Rates Fall to Zero?

The Real Exchange Rate, Real Interest Rates, and the Risk Premium

Equilibrium Bank Runs Revisited

Bayesian Analysis of Coefficient Instability in Dynamic Regressions

For further details, please see Scientific Events.

For further details, please see Scientific Events.

A Model of Equilibrium Institutions

Working in Family Firms: Less Paid but More Secure? Evidence from French Matched Employer-Employee Data

Vertical Integration, Innovation and Foreclosure

Wages, Employment, and Trade

Rational Inattention, Multi-Product Firms, and the Neutrality of Money

Financial Globalization and the Raising of Public Debt

Optimal Income Taxation with Asset Accumulation

Topics in Microeconometrics

Topics in Microeconometrics

Topics in Microeconometrics

Topics in Microeconometrics

Quasi-Maximum Likelihood Estimation and Testing for Nonlinear Models with Endogenous Explanatory Variables

Unobserved Heterogeneity in Matching Games

Heterogeneous Responses and Aggregate Impact of the 2001 Income Tax Rebates

Household Saving through Recessions and Crises

Strategic Complementarity, Fragility, and Regulation

Experimental Economics

Experimental Economics

Experimental Economics

Experimental Economics

Leaving Boys Behind: Gender Disparities in High Academic Achievement

Observational Learning with Position Uncertainty

Cointegrated VAR Model: Special Topics

Cointegrated VAR Model: Special Topics

Cointegrated VAR Model: Special Topics

Cointegrated VAR Model: Special Topics

Price and Brand Competition between Differentiated Retailers: A Structural Econometric Model

Cointegrated VAR Model: Special Topics

Cointegrated VAR Model: Special Topics

Judicial Efficiency and Financial Contracts: Evidence from a Natural Experiment

Abstract:
We exploit a 2004 credit reform in Brazil that simplied the selling of repossessed cars used as collateral for auto loans. We show that the legal change has led to loans with lower spreads, longer maturities, and higher leverage. The reform brought about an expansion of credit, enabling riskier low-income borrowers to obtain loans and purchase newer, more expensive cars. Although the credit reform improved access to credit, by expanding credit to riskier borrowers, it also led to increased incidences of default and repossession. In sum, we provide evidence on the consequences of a credit reform, highlighting the crucial role that collateral plays in credit markets.

Optimal Disclosure Policy and Undue Diligence

Consumption and Initial Mortgage Conditions: Evidence from Survey Data

Marriage with Labor Supply

Money is an Experience Good: Competition and Trust in the Private Provision of Money

Unemployment Insurance Over the Business Cycle

Paper 1: Heterogeneity and Behavioral Responses to Unemployment Benefits over the Business Cycle

Paper 2: Optimal Unemployment Insurance over the Business Cycle

Political Risk and International Valuation

Legal Investor Protection and Takeovers

The 2007 Subprime Market Crisis Through the Lens of European Central Bank Auctions for Short-Term Funds

Dynamic Bargaining over Redistribution in Legislatures

Advertising and the Welfare Implications of Endogenous Preferences

Precautionary Saving over the Business Cycle

Pricing and Incentives in Publicly Subsidized Health Care Markets: the Case of Medicare Part D

Until Death Do Us Part? The Marriage Model with Divorce

Legalizing Bribes

Credit Crises, Precautionary Savings, and the Liquidity Trap