Senior Fellows/Fellows

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Senior Fellows/Fellows

Income Inequality, Productivity, and International Trade

Wen-Tai HSU, Lin LU, Pierre M. PICARD
This paper discusses the effect of income inequality on selection and aggregate productivity in a general equilibrium model with non-homothetic preferences. It shows the existence of a negative relationship between the number and quantity of products consumed by an income group and the earnings of o...
Keywords: Income inequality, productivity, International trade
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Income Distribution and Economic Development: Insights from Machine Learning

Pushan DUTT, Ilia TSETLIN
We draw upon recent advances that combine causal inferences with machine learning, to show that poverty is the key income distribution measure that matters for development outcomes. In a predictive framework, we first show that LASSO chooses only the headcount measure of poverty from 37 income distr...
Keywords: poverty, inequality, income distribution, economic development
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Senior Fellows/Fellows

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Senior Fellows/Fellows, Pandemic

Implications of Stochastic Transmission Rates for Managing Pandemic Risks

Neng WANG, Jinqiang YANG, Harrison HONG
We develop a model of pandemic risk management and firm valuation. We introduce aggregate transmission shocks into an epidemic model and link valuations to infections via an asset-pricing framework with vaccines. Infections lower earnings growth but firms can mitigate damages. We estimate a large ...
Keywords: COVID-19, stochastic epidemic model, transmission volatility, Risk management, stock valuation
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Senior Fellows/Fellows

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Senior Fellows/Fellows

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May 2022

Idiosyncrasy as a Leading Indicator

Randall MORCK, Bernard YEUNG, Lu Y. ZHANG
Disequilibrating macro shocks affect different firms' prospects differently, increasing idiosyncratic variation in forward-looking stock returns before affecting economic growth. Consistent with most such shocks from 1947 to 2020 enhancing productivity, increased idiosyncratic stock return variation...
Keywords: Subjective expectations, business-level uncertainty
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Annual Conference

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International Macroeconomics, Money & Banking, Senior Fellows/Fellows

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May 2013

Identifying the Valuation Effects and Agency Costs of Corporate Diversification

Luc LAEVEN, Ross LEVINE, Martin R. GOETZ
This paper assesses the impact of the geographic diversification of bank holding company (BHC) assets across the United States on their market valuations. Using two new identification strategies based on the dynamic process of interstate bank deregulation, we find that exogenous increases in geograp...
Keywords: Corporate diversification, Agency problems, Economies of scope, Corporate insiders, Corporate valuation
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