Macroeconomics

We provide evidence that banks classify fixed-rate debt investment securities as held to maturity (HTM) rather than as available for sale (AFS) when HTM classification provides preferred financial accounting and regulatory capital treatments, not because they have a distinct economically motivated intent and ability to hold the securities to maturity.

Multinational enterprises are at the centre of policy debates in low- and middle-income countries. As some of the most productive and innovative firms in the world, which are at the core of global supply chains, multinational enterprises (MNEs) can accelerate development in the countries hosting them, both directly with their presence, and indirectly through linkages to local economic actors.

Multinational enterprises are at the centre of policy debates in low- and middle-income countries. As some of the most productive and innovative firms in the world, which are at the core of global supply chains, multinational enterprises (MNEs) can accelerate development in the countries hosting them, both directly with their presence, and indirectly through linkages to local economic actors.

Data is the new oil. It is the fuel for AI, a firm asset, a strategic advantage, information for prediction, a productivity booster, a privacy concern, a by-product of transactions, and a means of payment. How can we update traditional economic and finance frameworks to include a role for data and use these updated frameworks to measures it economic impact?

Many state and local governments incentivize new business creation. I analyze local growth policy in a setting where firm entry and expansion choices exhibit local complementarities, creating dynamic misallocation at the aggregate level. Optimal entry subsidies would speed the transition of Rust-belt workers to the South and Mountain West by an extra 10 million people by 2035, raising real incomes by 4%. Actual subsidies substantially worsen misallocation, lowering welfare by 3%, 6 times the size of the subsidies themselves.

We propose one route to a more inclusive society. Our context is the prevailing one of high wealth inequality where stockholders alone supply the stochastic discount factor governing the allocation of capital. A large and pervasive pecuniary externality is thus imposed on non-stockholder workers, something we view as antithetical to the notion of an inclusive society.

We develop a framework to measure the welfare impact of macroeconomic shocks throughout the distribution. The first-order impact of a shock is summarized by the induced movements in agents’ feasible sets: their budget constraint and borrowing constraints. We combine estimated impulse response functions with micro-data on household consumption bundles, asset holdings, and labor income for different US households. We find that inflationary oil shocks are regressive, but monetary expansions are progressive, and there is substantial heterogeneity throughout the life cycle.

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