The Anatomy of a Pure Price-Chasing Bubble
It is widely agreed that the Nasdaq during the dot-com era 20 years ago was a full-fledged stock market bubble. Recently, the US stock market according to many metrics has [...]
A Minskyan Approach to Mapping and Managing the (Western?) Financial Turmoil
The COVID-19 crisis paralyzed huge parts of the planet in weeks. It not only infected the population but injected a gargantuan dose of uncertainty into the system. In that regard, [...]
Liquidity Requirements, Free-Riding, and the Implications for Financial Stability Evidence from the early 1900s
Maintaining sufficient liquidity in the financial system is vital for its stability. However, since returns on liquid assets are typically low, individual financial institutions may seek to hold fewer such [...]
Structuring Mortgages for Macroeconomic Stability
We study mortgage design features aimed at stabilizing the macroeconomy. We model overlapping generations of mortgage borrowers and an infinitely lived risk-averse representative mortgage lender. Mortgages are priced using an [...]
COVID-19 as a Stress Test: Assessing the Bank Regulatory Framework
The widespread economic damage caused by the ongoing COVID-19 pandemic poses the first major test of the bank regulatory reforms put in place following the global financial crisis. This study [...]
The International Aspects of Macroprudential Policy
Countries are using macroprudential tools more actively with the goal of improving the resilience of their broader financial systems. A growing body of evidence suggests that these tools can accomplish [...]
Neglected No More: Housing Markets, Mortgage Lending, and Sea Level Rise
In this paper, we explore dynamic changes in the capitalization of sea level rise (SLR) risk in housing and mortgage markets. Our results suggest a disconnect in coastal Florida real [...]
Crisis Innovation
The effect of financial crises on innovation is an unsettled and important question for economic growth, but one difficult to answer with modern data. Using a differences-in-differences design surrounding the [...]
Has the Stock Market Become Less Representative of the Economy?
The firms listed on the stock market in aggregate as well as the top market capitalization firm contribute less to total non-farm employment and GDP now than in the 1970s. [...]
How Do Mortgage Refinances Affect Debt, Default, and Spending? Evidence from HARP
We use quasi-random access to the Home Affordable Refinance Program (HARP) to identify the causal effect of refinancing into a lower-rate mortgage on borrower balance sheet outcomes. Refinancing substantially reduces [...]