As America marks 250 years of independence, Adam Smith is again being pressed into service as a founding myth. A deeper reading of The Wealth of Nations reveals a far richer thinker than today’s easy invocations of markets and liberty suggest.
As America marks 250 years of independence, Adam Smith is again being pressed into service as a founding myth. A deeper reading of The Wealth of Nations reveals a far richer thinker than today’s easy invocations of markets and liberty suggest.
Martijn Boons, Anthony M. Diercks, Petra Sinagl, and Andrea TamoniWe study how macroeconomic developments affect asset prices by analyzing the response of equity yields to a well-identified long-run growth shock. Using synthetic equity yield data from Giglio et al. (2024), we show that a positive long-run shock steepens the equity yield curve by increasing expected dividend growth while leaving discount rates largely unchanged.
The fact that monetary policy tightening has stronger effects than easing is a longstanding puzzle in monetary economics. This article studies monetary transmission in settings where firms face multiple financing constraints – a common and well-documented feature of corporate financing. Our theory shows that the multiplicity of financing constraints notably dampens the transmission of expansionary policy to firm borrowing and investment, while amplifying the transmission of policy tightening.
Brad Hershbein, Katherine Lim, Douglas Webber, and Mike ZabekUsing novel data from the Survey of Household Economics and Decisionmaking, we examine how labor market tightness affects workers’ job quality.
For years, builders and developers have treated “sustainable” homes as someone else’s problem. Solar panels, batteries, double-glazed windows, correct insulation, good ventilation and better materials have been thought to be too expensive, too niche and too unprofitable to include in new homes, so they were left out.
Matthew Canzoneri, Behzad Diba, Luca Guerrieri, and Arsenii MishinIn a model with endogenous risk-taking, deposit insurance and limited liability may lead banks to make risky loans that are socially inefficient. Capital requirements can prevent excessive risk-taking at the cost of reducing liquidity-producing bank deposits. A policy that sets capital requirements just high enough to prevent excessive risktaking will move capital requirements pro-, counter-, or a-cyclically depending on the shock source.
Sriya Anbil, Alyssa Anderson, Ethan Cohen, and Romina RuprechtWe present a new constraint on the size of the Fed’s balance sheet: repo market capacity.
Marco Graziano, Marius Koechlin, and Andreas TischbirekWe study the spillovers of large-scale asset purchases (LSAPs) in the U.S. on financial intermediation in the euro area using bank-level supervisory data and high-frequency identified policy surprises. Our detailed panel data permit us to trace the impact of LSAPs through bank balance sheets.
Marcos Mac MullenI study the international transmission of fiscal policy and its impact on the real exchange rate (RER) and net exports. I document that periods of high government debt are strongly associated with a depreciated RER and subsequent increases in net exports. I present causal evidence that debt-financed fiscal expansions transmit primarily through deviations from uncovered interest parity, leading to a depreciated RER and increases in net exports over time.
