Knowledge that Transforms

Do real assets protect against inflation? Stocks’ core inflation betas are negative, while their energy betas are positive. Currencies, commodities, and real estate mostly hedge against energy inflation, but not core inflation. These hedging properties are reflected in the prices of inflation risks: only core inflation carries a negative risk premium, and its magnitude is consistent within and across asset classes, uniquely among macroeconomic risk factors. Energy inflation has become more procyclical and volatile since the 1990s, which helps explain the time-varying correlation between stock and bond returns. A two-sector New Keynesian asset pricing model accounts for these facts quantitatively.

We study the contribution of banks and nonbanks to cyclical fluctuations in the supply of syndicated loans. We find that a reduction in nonbank lending explains most of the contraction in syndicated credit and the associated employment losses during the Global Financial Crisis, while banks’ contribution is small. Looking over multiple cycles, we find nonbanks’ credit supply is roughly three times as cyclical as banks’, suggesting that nonbanks are the main drivers of syndicated lending cycles. A model in which government support stabilizes bank funding can explain the higher cyclicality of nonbanks.

When members of the same household have different risk preferences, whose preference matters more for investment decisions and why? We propose an intrahousehold model that aggregates individual preferences at the household level as a result of bargaining. We structurally estimate the model, analyze the determinants of bargaining power, and find a significant gender gap. Gender differences in individual characteristics, as well as gender effects, partially explain the gap. These patterns hold broadly across Australia, Germany, and the United States. We further link the distribution of bargaining power to households’ perceived gender norms in a cross-sectional analysis. (JEL G11, G41, G50)

We first document that, despite potential legal issues, overlapping directors are surprisingly prevalent among direct competitors. Using panel data regressions and plausibly exogenous shocks, we find that competing firms in markets with dense overlapping-director networks experience innovation herding, lose product differentiation, and, ultimately, perform poorly. Novel text-based network propagation tests of technologies show that intellectual property leakage plays a role as firms with dense overlapping director networks experience faster propagation of technologies to competitors. Our findings suggest a coordination problem where industry participants cannot stop rivals from earning small gains from leakage despite much larger industry-wide negative externalities.

Previous research shows that incentives to meet short-term earnings targets can cause firms to increase share buybacks, leading to cuts in investments and employment. Using plant-level census data, we find that incentives to engage in earnings-per-share-motivated buybacks result in lower productivity at both the plant and firm level. We attribute this productivity drop to two mechanisms: reduced investment in productivity-augmenting technology, and inefficient allocation of resources across a firm’s plants. We identify multiple frictions—including labor unions, financial constraints, agency problems, and adjustment costs—that can constrain efficient reallocations across plants and thus exacerbate the consequences of firms’ short-term incentives.

We study privatization and corporate ownership in transportation infrastructure, focusing on global airports. Privatization in general does not improve performance. However, private equity (PE) ownership has strong and persistent positive effects on efficiency, volume, and quality, with positive externalities for the local economy. We address selection using close auctions where PE and non-PE firms bid. PE funds expand physical capacity and encourage larger planes while adding low-cost carriers and international routes. They are especially effective in countries with more corruption or state-owned flag carriers. In contrast, the poorer performance of non-PE acquirers may reflect private benefits and historical state ties.

I document a significant gender gap in entrepreneurs’ access to early-stage equity financing. Using unique administrative data on French startups, I show that this gap is particularly pronounced in male-dominated sectors. Controlling for a comprehensive set of entrepreneur and startup characteristics—including demographics, backgrounds, and motivations—accounts for 42% of the average gender gap. However, in male-dominated sectors, 80% of the gap remains unexplained. Growth-oriented female entrepreneurs rely more heavily on bank loans, substituting equity with debt. Finally, VC-backed female-founded startups outperform their male counterparts in male-dominated sectors. These findings suggest that context-dependent stereotypes influence equity financing decisions.

We survey retail investors at an online bank to study how beliefs about the autocorrelation of aggregate stock returns shape investment decisions measured in administrative account data. Individuals’ beliefs exhibit substantial heterogeneity and predict trading responses to market movements. We inform half of our respondents that, historically, the autocorrelation was close to zero, which causes them to update their perceived current autocorrelation and return expectations. The treatment shifts respondents’ equity purchases during the COVID-19 crash months later in the direction implied by the intervention. Our results provide causal evidence about the drivers of disagreement and trade in asset markets.

We show that banks cross-sell future deposits and loans to existing household depositors. A bank is 20-percentage-points more likely to sell a loan to an existing depositor than to an otherwise comparable household. Existing depositors pay a premium when borrowing, and we find no indication that banks obtain an informational advantage on such borrowers, suggesting that the cross-selling is driven more by demand than by supply complementarities. These demand complementarities are in turn driven more by stickiness rather than by unobserved persistent preferences. Finally, banks internalize future cross-selling potential when setting deposit rates. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online

A key question for studying business dynamism is whether the costs of regulatory compliance fall homogeneously on small and large businesses. Using comprehensive establishment-level occupational microdata and occupation task information, we quantify a firm’s compliance costs as the share of wage bill for performing regulatory compliance tasks (RegIndex). We reveal an inverted-U relationship between firms’ RegIndex and their size: On average, RegIndex for mid-sized firms with around 500 employees is about 47% greater than that of the smallest firms and 18% greater than that of the largest firms. We further develop a shift-share methodology to disentangle the influence of regulatory requirements and enforcement on driving firms’ compliance costs.