Working Papers

Beliefs and Stock Market Fluctuations: New Evidence from the Past Seven Decades, with David Thesmar
Summary: A new measure of expected stock returns from a sophisticated investor is highly correlated with the earnings-price ratio, is contrarian in response to past stock returns, and predicts future stock returns. This contrasts with subjective expected returns of individuals and professional forecasters. Disagreement between sophisticated and individual investors is associated with higher trading volume, consistent with a model of heterogeneous beliefs.

Supervising Failing Banks, with Sergio Correia and Stephan Luck
Summary: This paper shows that a key role of banking supervision is to anticipate, monitor, and discipline failing banks. Stricter supervision in the 2008 GFC was associated with increased loss recognition and more bank closures. Increased strictness entails a trade-off between a lower resolution cost to the FDIC and reduced credit.

Bank Failures: Solvency versus Liquidity, with Sergio Correia and Stephan Luck
In preparation for the Annual Review of Financial Economics

Credit Allocation, Collateral, and Economic Development, with Paul Dai and Karsten Müller
Summary: Economic development is associated with a pronounced shift in credit from manufacturing to real estate. A two-sector structural change model with collateral constraints explains these patterns primarily through a relaxation of financing constraints. We document that liberalization of directed credit policies is one driver of this shift. Manufacturing and real estate credit have opposite predictive content for future growth, suggesting that the allocation of credit may matter for understanding long-run growth.

Household Debt Relief and the Debt Laffer Curve, with Gyozo Gyongyosi
Summary: Large-scale household debt relief leads to a sustained increase in both repayment rates and borrower income. The strongest responses are among borrowers with high—but not extremely high—indebtedness. As a result, the Debt Laffer Curve can invert for highly indebted borrowers. A model of household debt overhang and labor supply can account for these findings.

The Foreign Currency Fisher Channel: Evidence from Households, with Gyozo Gyongyosi and Judit Rariga
Revise and Resubmit, Review of Financial Studies
Media: SUERF Policy Brief
Summary: Household foreign currency debt exposure during a currency crisis leads to a one-for-one reduction in consumption with increased debt service, consistent with a “foreign currency Fisher channel.”

Business as Usual: Bank Net Zero Commitments, Lending, and Engagement, with Pari Sastry and David Marques-Ibanez
Media: New York Times, CNN Business, Financial Times, The Banker, VoxEU, MIT Sloan, Ideas Made to Matter, NBER Corporate Finance Program Report
Summary: Bank net zero commitments do not lead to lender divestment from brown sectors, increased financing of renewables, or a reduction in financed emissions. The results highlight the limits of voluntary commitments for decarbonization.

Publications

Failing Banks, with Sergio Correia and Stephan Luck
Quarterly Journal of Economics, Forthcoming
Media: Macro Musings Podcast, Finance & History podcast, Marginal Revolution, American Banker, Liberty Street Economics I, II, III, PCB Central Blog, Speaking of the Economy podcast

The Debt-Inflation Channel of the German Hyperinflation, with Markus Brunnermeier, Sergio Correia, Stephan Luck, and Tom Zimmermann
American Economic Review, July 2025 (Lead Article)
Replication Kit
Media: VoxEU, Liberty Street Economics, Virtual presentation (Markus’ Academy)

Credit Allocation and Macroeconomic Fluctuations, with Karsten Müller
Review of Economic Studies, November 2024
ReStud Version, Replication Kit, Website with sectoral credit database: The Global Credit Project
Media: World Bank All About Finance Blog, Marginal Revolution, Yahoo Finance, Noahpinion

Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu, with Sergio Correia and Stephan Luck
Journal of Economic History, December 2022 (Lead Article)
JEH Version, Replication Kit, Response to Lilley et al
Selected Media: Video of presentation from IMSI Conference (Session IV), The Economist, Vox, The Atlantic, NY Times, NY Times (Upshot), NY Times (John Barry)

Financial Crisis, Creditor-Debtor Conflict, and Populism, with Gyozo Gyongyosi
Journal of Finance, August 2022
JF Version
Media: The Hill, LSE, MIT News

Banking Crises Without Panics, with Matthew Baron and Wei Xiong
Quarterly Journal of Economics, February 2021
QJE Version, Replication Kit, BVX banking crisis chronology
Media: EconReporter, MIT News

Household Debt Revaluation and the Real Economy: Evidence from a Foreign Currency Debt Crisis, with Gyozo Gyongyosi
American Economic Review, September 2020 (Lead Article)
AER Version
Media: AEA Chart of the Week, Telex.hu

How Does Credit Supply Expansion Affect the Real Economy? The Productive Capacity and Household Demand Channels, with Atif Mian and Amir Sufi
Journal of Finance, April 2020
JF Version, Online Appendix, Replication Kit
Media: FT Alphaville, Equitable Growth, Barron’s, Chicago Booth Review, Woodrow Wilson School

Household Debt and Business Cycles Worldwide, with Atif Mian and Amir Sufi
Quarterly Journal of Economics, November 2017
QJE Version, Online Appendix, Replication Kit
Out-of-sample replication on the IMF's Global Debt Database, Replication kit for out-of-sample test
Media: NBER Digest, NBER Corporate Finance Program Report, Equitable Growth, The Economist, Chicago Booth Review

Book Chapters and Written Discussions

Comment on “Sustained Debt Debt Reduction: The Jamaica Exception,” by Arslanalp, Eichengreen, and Henry
Brookings Papers on Economic Activity, 2024
Replication Kit

Private Debt Booms and the Real Economy: Do the Benefits Outweigh the Costs?
in Leveraged: The New Economics of Debt and Financial Fragility, (Edited by Moritz Schularick), The University of Chicago Press, 2022
Replication Kit
Media: Video of presentation. Link to all conference presentations.