Knowledge that Transforms

We consider an informed large shareholder who can choose between making a takeover bid herself and initiating a sale to another acquirer. Such takeover activism complements direct takeovers because the very choice mitigates the asymmetric information problem, thereby improving efficiency. As more investors enter the market for corporate control, takeover activism increasingly replaces direct takeovers as the prevailing mode of disciplinary control change, matching the evolution in practice. Our model shows how this evolution, characterized by a symbiotic relationship between investor activism and private equity, arises to overcome asymmetric information and collective action problems through intermediated transactions.

We examine the incentives for mutual fund families to launch ESG funds. Our analyses reveal that introducing a new ESG fund leads to a significant increase in capital inflows to sibling non-ESG funds in the family. This flow spillover accounts for a significant portion of the monetary awards for families to offer ESG funds. We also find that spillover is stronger among retail funds and cannot be attributed to changes in the ESG profiles or abnormal returns of the sibling funds. Further evidence suggests that affect-based judgments, particularly the halo effect, are the key drivers of this spillover effect.

We study the causal effects of global supply chain disruptions by constructing a new index of real-time port congestion using Automatic Identification System data from container ships and a spatial clustering algorithm. We develop a model with search frictions between producers and retailers that links upstream production slack to downstream supply shortages and captures output and price responses to supply chain shocks. The co-movements of output, prices, spare capacity, and market tightness provide novel identification restrictions. We find that demand and supply shocks drove US disinflation in 2020, while the inflation surge in 2021 was driven mainly by supply chain shocks.

The recent inflation surge brought inflation back on people's minds. I quantify when and how much attention to inflation changes and derive the macroeconomic implications of these attention changes. I estimate an attention threshold at an inflation rate of 4 percent, that attention doubles when inflation exceeds this threshold, and that supply shocks have stronger and more persistent effects on inflation in times of high attention. Developing a model featuring the attention threshold, I show that attention changes offer a joint explanation for inflation surges, inflation's co-movement with inflation expectations, and a long last mile of disinflation.

How do majority groups respond to narrowing inequality in racially polarized environments? We study this by examining the Freedmen's Bureau, an agency created after the US Civil War to aid former slaves and launch institutional reform in the South. Using new historical records and an event-study approach, we estimate the bureau's impact on political, social, and economic outcomes. Vote shares for Democrats, the party that previously championed slavery and opposed Black civil rights, initially eroded in bureau counties, but these impacts faded as federal oversight weakened. Racial backlash emerged rapidly and persisted, suggesting White majorities sought to offset Black progress.

This paper considers how far private adaptation may reduce future vulnerability to climate risks. Using data on monthly firm-to-firm transactions from Pakistan, we find that flood-affected firms are more likely to relocate to safer ground and shift purchases toward suppliers in less flood-prone regions and reached via less flood-prone roads. The results indicate that firms are imperfectly informed about flood risk and update their beliefs following floods. We quantify aggregate impacts using a spatial model of endogenous production network formation. The findings suggest that firms' learning will shape the economic impact of increasingly frequent climate-related disasters.

This paper studies how collective bargaining affects wages and amenities. By merging collective bargaining agreements (CBAs) to linked employer-employee data in Brazil, I combine rich contracted amenities with wage information. I implement a difference-in-differences strategy that exploits a court ruling enforcing CBA continuation (i.e., ultra-activity) to estimate the effects of union bargaining power. Strengthening unions raises wages and amenities without reducing employment—increasing retention despite some labor-labor substitution. A revealed-preference approach shows that amenities account for 45 percent of total compensation gains. These findings suggest that collective bargaining can offset monopsony power, but employers retain the right-to-manage workforce composition.

Durables represent a large share of households' marginal propensity to spend (MPX). We develop a quantitative model of spending that takes durables into account and matches a rich set of empirical regularities simultaneously. Scaling the response of nondurables provides a poor approximation of the MPX on durables when it comes to its distribution in the population, its persistence over time, and its cyclicality. As an application, we study how the MPX varies with the size of stimulus checks and find that it declines more slowly compared to a model of purely nondurable spending.

We study residential segregation and access to public services across 1.5 million urban and rural neighborhoods in India. Muslim and Scheduled Caste segregation in India is high by global standards and only slightly lower than Black-White segregation in the United States. Within cities, public facilities and infrastructure are systematically less available in Muslim and Scheduled Caste neighborhoods. Nearly all regressive allocation is across neighborhoods within cities—at the most informal and least studied form of government. These inequalities are not visible in the aggregate data typically used for research and policy.