Working Papers

We compute the cross-country transfers that result from unconventional monetary policy in the Eurozone. The ECB funds the expansion of its aggregate balance sheet mostly by issuing bank reserves and cash in core countries. The national central…

This paper analyzes interactions between corporate governance and law enforcement practices, focusing on cases where deterrence is weak and harmful misconduct is profitable. We show how managerial compensation contracts, including stock-based…

This paper studies expectations formation when the underlying process has fat tails. Using a large sample of firm sales growth expectations, we document three facts: (i) the relationship between forecast revisions and future forecast errors is…

Over the last half-century, economic growth stagnated but stock-market wealth boomed. I present evidence that declining innovation productivity reconciles these trends. At the macro level, I document that R&D spending has fallen relative to…

This paper studies whether households are selectively inattentive to interest rates and examines its macroeconomic implications. We first use existing and newly-designed household surveys to establish that households close to durables purchases…

Student loans with income-contingent repayment insure borrowers against income risk but can reduce their incentives to earn more. Using a change in Australia’s income-contingent repayment schedule, I show that borrowers reduce their labor supply…

Sovereign debt yields have declined dramatically over the last half-century. Standard explanations, including aging populations and increases in asset demand from abroad, encounter difficulties when confronted with the full range of evidence. We…

Since the 2000s, U.S. public pension funds have actively shifted their risky investments away from public equities and toward alternative assets like private equity and hedge funds—some much more than others. We explore a range of possible…

Third-party litigation finance is an increasingly popular practice in commercial litigation. Despite calls for mandated disclosure, litigation funders are mostly anonymous to defendants, judges and juries. We first present an equilibrium model of…

We construct an international panel data set comprising three distinct yet plausible measures of government indebtedness: the debt-to-GDP, the interest-to-GDP, and the debt-to-equity ratios. Our analysis reveals that these measures yield…

What can we learn from the high-frequency responses in bond and currency markets to the recent tariff announcement about the status of the U.S. dollar as the global reserve currency? The dollar depreciated by 3.4% after April 4 in spite of rising…

Geoeconomic pressure — the use of existing economic relationships by governments to achieve geopolitical or economic ends — has become a prominent feature of global power dynamics. This paper introduces a methodology using large language models (…

We document the growth of retail options trading and provide evidence that retail investors are drawn to options by anticipated spikes in volatility. Retail investors purchase options in a concentrated fashion before earnings announcements,…

We examine whether and how granular, real-time predictive models should be integrated into central banks’ macroprudential toolkit. First, we develop a tractable framework that formalizes the tradeoff regulators face when choosing between…

Deferred prosecution agreements (DPAs) are now a standard tool used by prosecutors to punish corporate crime. Under a DPA, the defendant escapes prosecution by living up to the terms of the contract. However, if the prosecutor declares a breach,…

The representativeness heuristic constitutes a striking departure from Bayesian updating. According to a strong form of the heuristic, agents reverse a conditioning argument: for example inferring that a patient is more likely than not to have a…

We develop a theoretical and empirical framework to estimate bank franchise value. In contrast to regulatory guidance and some existing models, we show that sticky deposits combined with low deposit rate betas do not imply a negative duration for…

The CBO cost releases of legislative proposals contain valuable news about surpluses priced in by Treasury investors. Using daily event windows, we find that cost releases with large negative cash flows lowered Treasury valuations by more than 20…

Unfunded fiscal shocks are a significant source of risk premia in Treasury markets when central banks and governments decide to insulate taxpayers and expose bondholders’ wealth to government funding needs. We illustrate this bond risk premium…

Governments and central banks can protect either taxpayers or bondholders from government spending shocks. When they choose to insulate taxpayers, government bond yields need to increase in response to unfunded fiscal expansions as the government…