Working Papers

In a noisy rational expectations framework with costly information, some agents expend resources to become informed, and earn a return for their efforts by trading with the uninformed. Applying this insight, we examine the proposition that an…

Governments may extract rent from private citizens by inflating taxes and spending on projects which benefit special interests. Using a spatial equilibrium model, I show that less elastic housing supplies increase governments’ abilities to…

We present a theory of dynamic coalitions for a legislative bargaining game in which policies continue in effect in the absence of new legislation. We characterize Markov perfect equilibria with dynamic coalitions, which are decisive sets of…

We examine the economic determinants of short-sale supply, and its consequences for future stock returns.  Lendable supply increases with expected borrowing costs and decreases with financial statement constructs that indicate overvaluation…

Under revision for Econometrica

This paper studies U.S. banks’ exposure to interest rate and credit risk. We exploit the factor structure in interest rates to represent many bank positions in terms of simple factor portfolios.…

We estimate the spillovers of properties financed by the Low Income Housing Tax Credit (LIHTC) onto surrounding neighborhood residents. We nonparametrically estimate the impact of LIHTC development on nearby house prices by developing a new…

U.S. CEOs hold a large amount of equity that is not explicitly constrained by ownership guidelines or vesting requirements. Although the average CEO receives a risk premium in his annual pay for holding unconstrained equity, most CEOs hold more…

Research suggests that finding and hiring the right workers may be as important to firms as managing workers after they join organizations.  However, hiring the right workers is difficult.  In this paper trial employment is examined as…

We study the calculation of exact p-values for a large class of non-sharp null hypotheses about treatment effects in a setting with data from experiments involving members of a single connected network. The class includes null hypotheses that…

Daily mutual fund (MF) flows are highly persistent and price-destabilizing, and short-sellers (SSs) trade strongly in the opposite direction to these flows. This negative relation is associated with the expected component of MF flows (based on…

This paper introduces a new measure of firm’s exposure to systematic distress risk — the probability of a recession at the time of a firm’s failure. For stocks in the top quintile of the probability of failure, a median hedge portfolio based on…

Financial market imperfections can have significant impact on employment decisions of firms. We illustrate the economic importance of this channel by showing that employment decisions are constrained by firms’ financial health and liquidity. Our…

 A portion of the global wealth portfolio is directed towards a safe and liquid reserve asset, which recently has been the US Treasury bond. Our model links the determination of reserve asset status to relative fundamentals and relative debt…

I develop a simple hold-up model of political risk, which can be used to explore firms’ strategic options when their investments are subject to the threat of government expropriation. In the model, a firm decides whether to invest and then the…

We present a theory in which the key driver of short-term debt issued by the financial sector is the portfolio demand for safe and liquid assets by the non-financial sector. This demand drives a premium on safe and liquid assets that the…

A fixed cost investment in home automation technology can eliminate consumers’ marginal costs of responding to changing demand conditions. We estimate the welfare effects of a home automation technology using a field experiment run by a large…

In this paper we study the problems of estimating heterogeneity in causal effects in experimental or observational studies and conducting inference about the magnitude of the differences in treatment effects across subsets of the population. In…

This paper examines whether protest associated with the “long protest wave” of the 1960s and 1970s positively influenced private-sector union support. Past research has found no such influence. We use measures designed to more closely represent…

Two key features of the government bailout programs implemented in the 2008- 2009 financial crisis were: first, the general opposition of voters to these programs and second, the implementation of a variety of interventions, ranging from targeted…

Using hand-collected data on divisional managers at conglomerates, we find that a change in industry surplus in one division generates large spillovers on managerial payoffs in other divisions of the same firm. These spillovers arise only within…