Working Papers

We use equity returns to construct a time-varying measure of the interest rate that we call the zero-beta rate: the expected return of a stock portfolio orthogonal to the stochastic discount factor. The zero-beta rate is high and volatile. In…

We study the impact of government-led incentive systems by examining a staggered reform in the Chinese state-owned enterprise (SOE) performance evaluation policy. To improve capital allocative efficiency, starting in 2010, regulators evaluating…

We examine whether corporate money in politics benefits or hurts labor using the 2010 Supreme Court ruling Citizens United, which rendered bans on political election spending unconstitutional. In difference-in-difference analyses, affected states…

We survey public employees across the United States about their preferences regarding retirement plan options, and in particular at what employer contribution rate public employees would agree to switch to a defined contribution (DC) plan on a…

The designs of many new blockchains are inspired by the Byzantine fault tolerance (BFT) problem. While traditional BFT protocols assume most system nodes behave honestly, we recognize that blockchains are deployed in environments where nodes are…

New approaches to corporate purpose have emerged in recent years that hold out the promise of addressing concerns about corporate social responsibility (CSR) through shareholder governance, rather than in spite of it, by reconceptualizing…

Public finance and real estate are uniquely intertwined in China, where local governments also serve as monopolist sellers of land. We shed new light on how land sale decisions and land prices depend on local governments’ financing objectives.…

We analyze U.S. banks’ asset exposure to a recent rise in the interest rates with implications for financial stability. The U.S. banking system’s market value of assets is $2.2 trillion lower than suggested by their book value of assets…

We undertake an assessment of our two decades of research on financial literacy, building on our empirical research and theoretical work casting financial knowledge as a form of investment in human capital. We also draw on recent data to…

We explore the evolution of financial innovation, using 24,000 U.S. finance patents applied for and granted over last two decades. Patented financial innovations are substantial and economically important, with annual grants expanding from a few…

Using cross-border holding data from all custodians in China’s Stock Connect, we provide evidence that Chinese mainland insiders tend to evade the see-through surveillance by round-tripping via the Stock Connect program. After the regulatory…

Do stock price run-ups predictably revert? We develop a model of financial markets with two types of investors: rational investors and “oversensitive” investors who react excessively to salient public news. The model yields a summary statistic…

This paper studies the importance of idiosyncratic endowment shocks for aggregate asset prices in a generalized continuous-time framework that accommodates both jumps and recursive preferences. I show that, regardless of the presence of jumps,…

Corporate credit lines are drawn more heavily when funding markets are more stressed. This covariance elevates expected bank funding costs. We show that credit supply is inefficiently dampened by the associated debt-overhang cost to bank…

We characterize the contribution of immigrants to U.S. innovation, both through their direct productivity as well as through their indirect spillover effects on their native collaborators. To do so, we link patent records to a database containing…

Before the era of large central bank balance sheets, banks relied on incoming payments to fund outgoing payments in order to conserve scarce liquidity. Even in the era of large central bank balance sheets, rather than funding payments with…

Decisions take time, and the time taken to reach a decision is likely to be informative about the cost of more precise judgments. We formalize this insight using a dynamic model of optimal evidence accumulation. We provide conditions under which…

Privately issued money often bears devaluation risk that create monetary transaction frictions. We evaluate the real effects of supplying a new type of safe money in the historical context of the U.S. in 1863. We instrument for the change in…

How can we assess whether macro-prudential regulations are having their intended effects? If these regulations are optimal, their marginal benefit of addressing externalities should equal their marginal cost of distorting risk- sharing. These…

We develop a new approach to identify different categories of depositors during periods of uncertainty and quantify their compensation to remain in the bank. We isolate withdrawals due to liquidity needs, deterioration of fundamentals, and…