Organizations & Markets

How does task expertise affect the allocation of attention?

The financial crisis of 2007–2008 was the most serious since the Great Depression and severely impacted the global economy. Yet more than 10 years after the crisis, we still lack clear understanding of its cause. Accounts point to some elements of fact but tend to be fragmented and sometimes contradictory. More than ever, we need an account that can put the puzzle pieces together and help us understand how to prevent a crisis like this from happening again.

High returns for investors. Our author argues that a different approach to ESG can strike a better balance between environmental and social goals and profits.

Performance expectations are revisited pertaining to particular corporate strategies that were highlighted by Rumelt (1974). In particular, suggestions regarding expectations about conglomerate enterprises, vertical integration, and mature- or declining-demand businesses are offered in light of additional information about research findings and observed industry phenomena that are at odds with information available when Rumelt's (1974) study of diversification was performed.

Housing affordability has become the main policy challenge for most large cities in the world. Zoning, rent control, housing vouchers, and tax credits are the main levers employed by policy makers. We build a new dynamic stochastic spatial equilibrium model to evaluate the effect of these policies on house prices, rents, residential construction, labor supply, output, income and wealth inequality, as well as the location decision of households within the city. The analysis incorporates risk, wealth effects, and resident landlords.

We consider optimal government debt maturity in a deterministic economy in which the government can issue any arbitrary debt maturity structure and in which bond prices are a function of the government's current and future primary surpluses. The government sequentially chooses policy, taking into account how current choices - which impacts future policy -- feed back into current bond prices. We show that issuing consols constitutes the unique stationary optimal debt portfolio, as it boosts government credibility to future policy and reduces the debt financing costs.

I study whether banks' loan loss provisioning contributes to economic downturns, by examining the U.S. housing market. Specifically, I examine the aggregate effects of banks' delayed loan loss recognition (DLR) on house prices during the Great Recession and the channels through which these potential effects arose. I construct ZIP-code-level exposure to banks' DLR before the crisis and compare high- and low-exposure ZIP codes during the crisis to examine the aggregate effects of banks' DLR on the housing market.

We examine the ability of existing and new factor models to explain the comovements of G10-currency changes. Extant currency factors include the carry, volatility, value, and momentum factors. Using a new clustering technique, we find a clear two-block structure in currency comovements with the first block containing mostly the dollar currencies, and the other the European currencies.

We investigate the impact of reporting regulation on corporate innovation. Exploiting thresholds in Europe’s regulation and a major enforcement reform in Germany, we find that forcing firms to publicly disclose their financial statements discourages innovative activities. Our evidence suggests that reporting regulation has significant real effects by imposing proprietary costs on innovative firms, which in turn diminish their incentives to innovate.