[We study the impact of too-big-to-fail (TBTF) guarantees on the market for retail deposits. Exploiting information about all personal deposit accounts in Denmark and salient changes to the deposit insurance limit, we provide evidence that systemically important banks successfully retain and attract uninsured deposits in a crisis at the expense of other banks even as they differentially lower their interest rates. The funding shock suffered by nonsystemic banks causes a decrease in their lending. The results point to the distortive effects of TBTF guarantees in the market for retail deposits.]

Did the financial crisis in 2007–2008 spread from distressed banks to households through a contraction of the credit supply? We study this question with a dataset that contains observations on all accounts in Danish banks as well as comprehensive information about individual account holders and banks. We document that banks exposed to the financial crisis reduced their lending relative to nonexposed banks, which in turn caused a significant decrease in the borrowing and spending of their customers. The effects were persistent: borrowing remained lower through the postcrisis years and spending foregone during the crisis was not recovered.

We develop a system of disaggregated economic accounts. The system breaks down national accounting positions into bilateral flows between consistently defined groups of consumers (consumer cells), groups of producers (producer cells), the government, and the rest of the world. We disaggregate the full circular flow of money, including consumer spending, labor compensation, firm profits, intermediates trade, foreign trade, and government transactions, while satisfying all national accounting identities. We implement the disaggregated system for small region-by-industry cells in Denmark and present stylized facts, such as variation in domestic spending, local and urban bias in consumer spending, and a pattern of triangular flows across regions. Cell-level measures of spending intensity capture how much spending by a cell contributes to the income of cells experiencing unemployment after a shock. Using a general equilibrium model, we show that fiscal transfers raise aggregate GDP by more when they target cells with high spending intensity on unemployed cells. The disaggregated economic accounts help governments select more effective policies.

Drawing on a unique dataset of leaked customer lists from offshore financial institutions matched to administrative wealth records in Scandinavia, we show that offshore tax evasion is highly concentrated among the rich. The skewed distribution of offshore wealth implies high rates of tax evasion at the top: we find that the 0.01 percent richest households evade about 25 percent of their taxes. By contrast, tax evasion detected in stratified random tax audits is less than 5 percent throughout the distribution. Top wealth shares increase substantially when accounting for unreported assets, highlighting the importance of factoring in tax evasion to properly measure inequality.

Do elites capture foreign aid? This paper documents that aid disbursements to highly aid-dependent countries coincide with sharp increases in bank deposits in offshore financial centers known for bank secrecy and private wealth management but not in other financial centers. The estimates are not confounded by contemporaneous shocks—such as civil conflicts, natural disasters, and financial crises—and are robust to instrumenting using predetermined aid commitments. The implied leakage rate is around 7.5% at the sample mean and tends to increase with the ratio of aid to GDP. The findings are consistent with aid capture in the most aid-dependent countries.

We study the impact of too-big-to-fail (TBTF) guarantees on the market for retail deposits. Exploiting information about all personal deposit accounts in Denmark and salient changes to the deposit insurance limit, we provide evidence that systemically important banks successfully retain and attract uninsured deposits in a crisis at the expense of other banks even as they differentially lower their interest rates. The funding shock suffered by nonsystemic banks causes a decrease in their lending. The results point to the distortive effects of TBTF guarantees in the market for retail deposits. Received March 15, 2018; editorial decision January 15, 2019 by Philip Strahan.

We analyze the distributional effects of monetary policy on income, wealth, and consumption. We use administrative household‐level data covering the entire population in Denmark over the period 1987 to 2014 and exploit a long‐standing currency peg as a source of exogenous variation in monetary policy. We find that gains from softer monetary policy in terms of income, wealth, and consumption are monotonically increasing in ex ante income. The distributional effects reflect systematic differences in exposure to the various channels of monetary policy, especially nonlabor channels (e.g., leverage and risky assets). Our estimates imply that softer monetary policy increases income inequality.