Aligning the Financial System and Capital Markets with Long-Term Economic and Public Interest Outcomes

The following post is the author’s combined oral and written testimony presented to the U.S. House Committee on Financial Service’s Subcommittee on Investor Protection, Entrepreneurship and Capital Markets for a hearing entitled, “Climate Change and Social Responsibility: Helping Corporate Boards and Investors Make Decisions for a Sustainable World” on Thursday, February 25, 2021. A video […]

A Closer Look at Today’s U.S. Treasury Security Market

Since the introduction of Treasury Inflation Protected Securities (TIPS) in 1997, financial experts have used the quoted yield to maturity on these instruments to determine a “market-driven measure” of expected inflation. In particular, financial analysts have taken the quoted yield to maturity on a given conventional U.S. Treasury security and subtracted the quoted yield to […]

Current State of Research on Factor Investing in Government Bonds

Factor investing has grown in popularity over the last few decades, especially with respect to equity markets. After extending Fama-French factors to corporate bond markets, recent research has more often concentrated on the government bond space and revealed that there is indeed clear empirical evidence for the existence of significant government bond factors. Voices that […]

Partisanship in Loan Pricing

Recent years have seen a heightened level of partisan conflict in the U.S.[1] Both academic research and anecdotal evidence suggest that partisanship generates profound influence on individuals’ beliefs, leading them to selectively incorporate information that is favorable to their own political orientation.[2] In particular, partisanship appears to play a role in influencing individuals’ perceptions of […]

Intangibles to Tangible: In Search of Firm Value Creation

Intangible assets have become key factors in economics and have received much attention of late. Recent studies focus on the single aspect of intangible-related information, whereas aggregate proxies of intangible assets are scarce. In this post, we introduce our recent working paper in which we construct a comprehensive intangible assets-related measure, I-SCORE, and study the […]

Public Debt and Household Lending

For a large number of European economies, real estate accounts for more than 70% of wealth, whereas financial assets usually account for below 20%.  From a macroeconomic perspective, the large exposure to the real estate market represents both a vulnerability and a source of resilience: on the one hand, it exposes a large share of […]

Who’s Afraid of the Big Bad Debt?

The coronavirus continues to exact an enormous human and economic toll. To prevent economic collapse, the federal government has pulled out all the stops, resorting to both monetary policy and fiscal policy. Monetary policy cannot go it alone, especially in our current crisis. Having all but zeroed out interest rates, the Federal Reserve currently has […]

The Tax Elasticity of Financial Statement Income: Implications for Current Reform Proposals

There has been growing attention among policymakers and the general public to the taxation of multinational corporations (MNCs) in recent years. This reflects widespread concern about the capacity of the international tax regime – which originated in the 1920s – to accommodate recent developments such as the growth of digital services across borders. In particular, […]

The Impact of COVID-19 on the Municipal Securities Market During the Spring of 2020

The COVID-19 pandemic and associated global economic shutdown roiled financial markets around the world during the spring of 2020. The usually placid municipal securities market was not immune from this disruption. Initially, investors flocked to municipal securities to de-risk portfolios in response to the growing pandemic, pushing prices higher and bond yields to record lows. […]

FinTech and the COVID-19 Pandemic: Evidence from Electronic Payment Systems

The COVID-19 pandemic has changed many aspects of the way that individuals engage with banking and payment tools, including various FinTech services. There are several reasons why the pandemic might have accelerated the adoption of FinTech and other digital platforms in payments by consumers and financial institutions. The pandemic may have led to an increase […]