Six structures in search of stability
This paper analyses the proposition that adjusting structure can strengthen safety and therefore promote stability. It examines six proposals...
Maturity Mismatch Stretching: Banking Has Taken a Wrong Turn
This note reviews the evolution of maturity transformation in banking and discuss- es the financial stability implications of its current level...
Activist Funds, Leverage, and Procyclicality
We develop a dual-layered agency model to study blockholder monitoring by activist funds that compete for investor flow. Competition for flow affects...
Endogenous Correlated Network Dynamics
We model the structure and strategy of social interactions prevailing at any point in time as a directed network and we address the following open...
If Greece defaults, dominoes will not fall
How would a unilateral Greek default affect politics and policy elsewhere in Europe? A Greek default is more likely to strengthen voter support across...
Why Iceland can now remove capital controls
Iceland has just announced it is getting rid of its capital controls. This column argues that the government’s plan is a credible, efficient and fair...
Default and political survival in networked democracies since 1870
Many fear that a Greek default would lead voters elsewhere in Europe to favour default over austerity. This column argues that it is more likely to...
Blended Automation: Integrating Algorithms on the Floor of the New York Stock Exchange
The recent automation of the American stock market has replaced floor intermediaries with trading algorithms, calling into question the sociological...
The Bankers’ Paradox: The Political Economy of Macroprudential Regulation
Macroprudential regulation, which has emerged as a new departure in financial regulation (albeit with a longer heritage), since the financial crash...
Why risk is hard to measure
Regulators and financial institutions increasingly depend on statistical risk forecasting. This column argues that most risk modelling approaches are...
Why risk is so hard to measure
This paper analyzes the robustness of standard risk analysis techniques, with a special emphasis on the specifications in Basel III. We focus on the...
News Shocks and Asset Prices
We study the importance of anticipated shocks (news) for understanding the comovement between macroeconomic quantities and asset prices. We find that...
When Arm’s Length Is Too Far. Relationship Banking over the Credit Cycle
Using a novel way to identify relationship and transaction banks, we study how banks’ lending techniques affect credit constraints of small and medium...
Dynamic Equilibrium with Rare Events and Heterogeneous Epstein-Zin Investors
We consider a general equilibrium Lucas (1978) economy with one consumption good and two heterogeneous Epstein-Zin investors. The output is subject to...
