Milstein All Research

Bank balance sheet lending is commonly viewed as the predominant form of lending. We document and study two margins of adjustment that are usually absent from this view using microdata in the $10 trillion U.S. residential mortgage market. We first document the limits of the shadow bank substitution margin: shadow banks substitute for traditional “deposit-taking” banks in loans which are easily sold, but are limited from activities requiring on-balance-sheet financing.

In a monetary union, the risk-free rate cannot respond to country-level fiscal positions, leaving only default spreads and convenience yields to respond. Empirically, we find that convenience yields explain a large share of the variation in Eurozone sovereign bond yields. Eurozone countries earn larger convenience yields when they experience larger surpluses, suggesting convenience yields are important fiscal shock absorbers.

We document new evidence on the capitalization, funding structure, and performance of private credit funds using comprehensive fund-and asset-level data covering most of the industry. Private credit funds are highly capitalized, with equity typically accounting for 65-80% of total assetsmore than six times the capitalization of U.S. banks, where equity represents about 10%. Debt usage is moderate and largely reflects bank credit lines used for liquidity management.

This paper analyzes the AI infrastructure boom as a physical capital buildout centered on data centers, power infrastructure, cooling systems, and specialized chips. It studies how this buildout is financed through hyperscalers, third-party developers, REITs, private credit, and structured finance, and discusses the implications for leverage, risk allocation, and financial stability.

This chapter summarizes the tectonic shifts that took place in the U.S. housing market between 2019 and 2025. I explore the roles of remote work and lower interest rates in the dramatic rise of aggregate house prices, the"flattening" of the urban bidrent curve in the cross-section of locations, and the fiscal implications of the "Urban Doom Loop." I discuss how mortgage lock-in effects may have stabilized house prices in the wake of more recent increases in interest rates, at the expense of residential mobility.