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Working Papers

MFA Best Doctoral Paper Award (2021)

WFA PhD Candidate Award For Outstanding Research (2021)

EFA Engelbert Dockner Memorial Prize for the Best Paper by Young Researchers, Runner-Up (2021)

FMA Best Paper in Investments (2021)

Bank of Canada Graduate Student Paper Award, Runner-Up (2022)

Colorado Finance Summit Best PhD Paper Award (2022)

Top Finance Graduate Award (2023)

This paper tests the conventional view that redistribution is central to the democratization process using data from stock markets. Consistent with this view, democratizations have a large, negative impact on asset valuations driven by a rise in redistribution risk. Across 90 countries over 200 years, risk premia are substantially elevated in democratizations, similar in magnitude to financial crises. A shift in Catholic church doctrine in support of democracy provides causal evidence that democratizations increase risk premia. Successful democratizations lead to substantial redistribution: the size of the public sector grows, income inequality falls, and the labor share of income rises. An extended version of the canonical redistribution-based model of democratization that includes asset prices can quantitatively explain these effects. The model also explains the negligible asset pricing response to autocratizations. Neither an increase in macroeconomic risk nor generic political risk can explain the results.

with Sylvain Catherine and Natasha Sarin

Revise and Resubmit, Journal of Finance

Red Rock Finance Conference Best Paper Award (2020)

SFS Cavalcade Best Paper in Asset Pricing (2021)

Marshall Blume Prize in Financial Research (2022)

Recent influential work finds large increases in inequality in the U.S. based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper revisits this conclusion by incorporating Social Security retirement benefits into measures of wealth inequality. We find that top wealth shares have not increased in the last three decades when Social Security is properly accounted for. This finding is robust to assumptions about how taxes and benefits may change in response to system financing concerns. When discounted at the risk-free rate, real Social Security wealth increased substantially from $4.9 trillion in 1989 to $52.6 trillion in 2019. When we adjust the discount rate for long-run macroeconomic risk, this increase remains sizable, growing from over $4.0 trillion in 1989 to $41.2 trillion in 2019. Consequently, by 2019, Social Security wealth represents 59% of the wealth of the bottom 90% of the wealth distribution.

Press: Marginal Revolution, Pro-Market, The Economist

Presentation link: SFS Cavalcade

with James Paron and Jessica Wachter

Revise and Resubmit, Review of Financial Studies

Sovereign debt yields have declined dramatically over the last half-century. Standard explanations for this decline, including aging populations and increases in asset demand from abroad, encounter difficulties when confronted with the full range of evidence across asset classes. We propose instead that the decline in inflation and default risk caused falling interest rates, a phenomenon that is not unique to our century. We show that a model with investment, inventory storage, and sovereign default captures the decline in interest rates, the stability of equity valuation ratios, and the recent reduction in investment and output growth corresponding to the zero lower bound.

with Marco Grotteria and S. Lakshmi Naaraayanan

This paper documents that foreign lobbying influences US government spending. We introduce a comprehensive dataset of over 230,000 date-stamped, in-person meetings between agents representing foreign governments and individual US legislators, state governors, and employees of US executive agencies from 2000 to 2018. The data suggest that foreign agents meet disproportionately with individuals important for foreign aid and corporate subsidies, like legislators sitting on powerful congressional committees. Foreign agents also maintain connections with legislators even after they depart powerful committees, providing evidence that meetings do not just reflect short-term quid-pro-quo arrangements. Around meetings, foreign countries receive greater amounts of financial aid. Foreign firms whose governments lobby more often also receive larger corporate subsidies from areas the legislators and governors that they meet with represent. Finally, legislators who meet more often with foreign agents receive both monetary and electoral benefits, while we do not find changes in the political contributions they receive or in their probability of re-election, suggesting that legislators are not punished by their constituents for meeting with representatives of foreign countries.

Press: Pro-Market

with Sylvain Catherine, James Paron, and Natasha Sarin

How are households exposed to interest-rate risk? When rates fall, households face lower future expected returns but those holding long-term assets—disproportionately the wealthy and middle-aged—experience capital gains. We study the hedging demand for long-term assets in a portfolio choice model. The optimal interest-rate sensitivity of wealth is hump-shaped over the life cycle. Within cohorts, it increases with wealth and earnings. These predictions fit observed patterns in the United States, suggesting a relatively efficient distribution of interest-rate risk. By protecting workers from rate fluctuations, Social Security limits the welfare consequences of rising wealth inequality when rates fall.

Publications

Journal of Public Economics (2020)

with Sylvain Catherine and Natasha Sarin

Press: MarketWatch, MarketWatchMarketWatch

Journal of Portfolio Management​ (2020)

with Jonathan Berk and Jules van Binsbergen

Technical Reports

FEDS Note (2016)

with Elizabeth Holmquist and Youngsuk Yook

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