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Journal Article
Corporate Leverage and Investment
Marsh, W. Blake; Chelluri, Karna; Rodziewicz, David (2020-02-27)
In this article, we examine the relationship between high corporate leverage and future firm investment spending on structures, machinery, and equipment. In other words, we examine how debt influences the growth of a firm’s capital stock or fixed assets. We find that, on average, more leveraged firms across industries tend to have lower levels of investment activity in the future. Specifically, we find that the negative relationship between debt and investment is strongest for the most highly indebted firms and is evident in both economic downturns and expansions.
Economic Review , Volume v.105 , Issue no.1 , Pages 37-55

Working Paper
Firm Dynamics and the Minimum Wage: A Putty-Clay Approach
Aaronson, Daniel; French, Eric; Sorkin, Isaac (2013-12-14)
We document two new facts about the market-level response to minimum wage hikes: firm exit and entry both rise. These results pose a puzzle: canonical models of firm dynamics predict that exit rises but that entry falls. We develop a model of firm dynamics based on putty-clay technology and show that it is consistent with the increase in both exit and entry. The putty-clay model is also consistent with the small short-run employment effects of minimum wage hikes commonly found in empirical work. However, unlike monopsony-based explanations for small short-run employment effects, the model ...
Working Paper Series , Paper WP-2013-26

Working Paper
Macroeconomic Implications of Uniform Pricing
Kozlowski, Julian; Daruich, Diego (2020-07-15)
We compile a new database of grocery prices in Argentina, with over 9 million observations per day. We find uniform pricing both within and across regions—i.e., product prices almost do not vary within stores of a chain. Uniform pricing implies that prices would not change with regional conditions or shocks, particularly so if chains operate in several regions. We confirm this hypothesis using employment data. While prices in stores of chains operating almost exclusively in one region do react to changes in regional employment, stores of chains that operate in many regions do not. Finally, ...
Working Papers , Paper 2019-024

Working Paper
Firm Networks and Asset Returns
Ramirez, Carlos (2017-01)
This paper argues that changes in the propagation of idiosyncratic shocks along firm networks are important to understanding variations in asset returns. When calibrated to match key features of supplier-customer networks in the United States, an equilibrium model in which investors have recursive preferences and firms are interlinked via enduring relationships generates long-run consumption risks. Additionally, the model matches cross-sectional patterns of portfolio returns sorted by network centrality, a feature unaccounted for by standard asset pricing models.
Finance and Economics Discussion Series , Paper 2017-014

Working Paper
Last Resort Insurance: Wildfires and the Regulation of a Crashing Market
Taylor, Reid; Turland, Madeline; Weill, Joakim A. (2025-03-26)
An increasing number of people are denied home insurance coverage in the private market and must instead turn to state-sponsored plans known as “Insurers of Last Resort.” This paper examines how insurers of last resort interact with the private market under increasing disaster risks. We first present a simple model of an adversely selected insurance market, highlighting that the insurer of last resort allows strict price regulation to be compatible with full insurance. We then empirically study the California non-renewal moratoriums, a regulation that forced insurers to supply insurance ...
Working Papers , Paper 2510

Working Paper
Beyond the Doomsday Economics of “Proof-of-Work” in Cryptocurrencies
Auer, Raphael (2019-02-01)
This paper discusses the economics of how Bitcoin achieves data immutability, and thus payment finality, via costly computations, i.e., ?proof-of-work.? Further, it explores what the future might hold for cryptocurrencies modelled on this type of consensus algorithm. The conclusions are, first, that Bitcoin counterfeiting via ?double-spending? attacks is inherently profitable, making payment finality based on proof-of-work extremely expensive. Second, the transaction market cannot generate an adequate level of ?mining? income via fees as users free-ride on the fees of other transactions in a ...
Globalization Institute Working Papers , Paper 355

Working Paper
Assessing the Common Ownership Hypothesis in the US Banking Industry
Grundl, Serafin J.; Gramlich, Jacob P. (2024-07-12)
The common ownership hypothesis (COH) states that firms with common shareholders, primarily large asset managers, compete less aggressively with each other. The U.S. banking industry is well suited to assess the common ownership hypothesis, because thousands of private banks without common ownership (CO) compete with hundreds of public banks with high and increasing levels of CO. This paper assesses the COH in the banking industry using more comprehensive ownership data than previous studies. In simple comparisons of raw deposit rate averages we document that the deposit rates of public banks ...
Finance and Economics Discussion Series , Paper 2024-022r1

Working Paper
Macroeconomic Implications of Uniform Pricing
Kozlowski, Julian; Daruich, Diego (2021-05-11)
We compile a new database of grocery prices in Argentina. We find uniform pricing both within and across regions—i.e., prices almost do not vary within stores of a chain. In line with uniform pricing, prices in stores of chains operating in one region react to changes in regional employment, while prices in multi-region chains do not. Using a quantitative regional model with multi-region firms and uniform pricing, we find a one-half smaller elasticity of prices to a regional than an aggregate shock. This result highlights that some caution may be necessary when using regional shocks to ...
Working Papers , Paper 2019-024

Report
Reference guide to U.S. repo and securities lending markets
Copeland, Adam; McCaughrin, Rebecca; Baklanova, Viktoria (2015-09-01)
This paper is intended to serve as a reference guide on U.S. repo and securities lending markets. It begins by presenting the institutional structure, and then describes the market landscape, the role of the participants, and other characteristics, including how repo and securities lending activity has changed since the 2007-09 financial crisis. The paper then discusses vulnerabilities in the repo and short-term wholesale funding markets and the efforts to limit potential systemic risks. It next provides an overview of existing data sources on securities financing markets and highlights ...
Staff Reports , Paper 740

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