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Discussion Paper
Corporate Equities by Issuer in the Financial Accounts of the United States
This FEDS Note shows how we report the value of corporate equities outstanding in the Financial Accounts and describes how we estimate each of its components.
Working Paper
The Monetization of Innovation
We develop a dynamic model for digital service firms, which invest in monetization to generate revenues from services provided to customers for free. Our model captures and explains why such firms often build a large customer base and become highly valued while continuing to suffer losses—traditional models would struggle to explain this pattern. Counterfactual analysis reveals that monetization uncertainty slows technological advancement by diverting resources away from innovation. We also show that regulation aimed at protecting user privacy has sizable adverse effect on firm size and the ...
Working Paper
What is the chance that the equity premium varies over time? evidence from predictive regressions
We examine the evidence on excess stock return predictability in a Bayesian setting in which the investor faces uncertainty about both the existence and strength of predictability. Departing from previous studies, we allow the regressor to be stochastic. When we apply our methods to the dividend-price ratio and payout yield, we find that even investors who are quite skeptical about the existence of predictability sharply modify their views in favor of predictability when confronted by the historical time series of returns and predictor variables. We find that taking into account the ...
Discussion Paper
Matching Banks by Business Model, Geography and Size : A Dataset
In this note, we describe an algorithm, developed in Carlson, Shan, and Warusawitharana (2013), to match banks that are geographically close and are similar in size and business model. Concurrently, we also release a data set of matched banks obtained from applying this algorithm from 1998 to 2014, as well as some of the associated computer programs.
Working Paper
Finance and Productivity Growth: Firm-level Evidence
Using data on a broad set of European firms, we find a strong positive relationship between the use of external financing and future productivity (TFP) growth within firms. This relationship is robust to various measures of financing and productivity, and strengthens as financing costs increase. We provide evidence against a reverse-causality explanation by showing that this relationship arises from the component of TFP that is outside the information set of the firm. These findings indicate that financial development supports productivity growth within firms, and helps explain why economic ...
Working Paper
Capital ratios and bank lending: a matched bank approach
This paper examines the impact of bank capital ratios on bank lending by comparing differences in loan growth to differences in capital ratios at sets of banks that are matched based on geographic area as well as size and various business characteristics. We argue that such comparisons are most effective at controlling for local loan demand and other environmental factors. For comparison we also control for local factors using MSA fixed effects. We find, based on data from 2001 to 2009, that the relationship between capital ratios and bank lending is insignificant until the recent financial ...