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The workshop discussed important open questions in different areas of macro finance. The ultimate aim was to stimulate novel research ideas on how to address the big open questions in the field. With this goal in mind, the workshop was informal and interactive. Unlike at a typical conference, speakers did not present individual papers. Instead, a senior academic, the session chair, began each session with a brief introduction to an area of research. Thereafter, younger researchers presented discussions of key questions and recent approaches to important research questions. At the end of each session, participants engaged in an open discussion moderated by the chair. The first session discussed financial intermediaries, including the constraints they face and their influence on macroeconomic outcomes; the second focused on households, including their balance sheets, financial constraints, and beliefs; the third analyzed firms, including their production activities on the asset side and borrowing constraints on the liability side; and the final session discussed the relationship between empirical work based on micro data and general equilibrium, aggregate outcomes.

A recurring theme was that rich new data have allowed researchers to uncover new facts. First, empirical studies point to elements that were not fully considered by classic economic models developed in the 20th century, such as the importance of mortgages for household decision-making, the relevance of earnings-based borrowing constraints for firms, and potential deviations from rational expectations. Second, there exists significant heterogeneity within each of the financial, household, and firm sectors (e.g., differences in the types of assets and debt held by financial institutions, households, and firms; the strength of their overall balance sheets; the expectations they hold about uncertain future outcomes). Third, the US economy is evolving over time, with increasing prominence of fintechs in the financial sector and intangible assets in the firm sector, to name a few examples. An important challenge is distilling the complex evidence into key aspects that can be incorporated in tractable models to perform general equilibrium analyses. Looking forward, both theorists and empiricists advocated greater cooperation among each other, with the hope that micro data analyzed in clever ways can produce key inputs into theoretical models.

Summary of Open Discussions


Thursday, October 7, 2021
8:45 am - 9:15 am
Registration and Breakfast
Session 1: Banking and Financial Intermediation
9:15 am - 9:30 am
A/V Introduction
9:30 am - 9:40 am
José Scheinkman, Professor of Economics, Columbia University
9:40 am - 9:45 am
9:45 am - 10:15 am
Virtual - What Have We Learned from the Data about Constraints of Financial Intermediaries?
Juliane Begenau, Associate Professor of Finance, Stanford Graduate School of Business
10:15 am - 10:20 am
10:20 am - 10:50 am
“What are the mechanisms for contagion in the financial system? What underlies the rise of the financial system and what could be the future developments?”
Maryam Farboodi, Assistant Professor of Finance, MIT Sloan School of Management
10:50 am - 10:55 am
10:55 am - 11:25 am
Virtual - What are the Mechanisms that Translate Financial Shocks into Real Outcomes?
Gabriel Chodorow-Reich, Associate Professor of Economics, Harvard University
11:25 am - 11:40 am
11:40 am - 12:25 pm
Open Discussion Led by José Scheinkman
12:25 pm - 1:25 pm
Private Lunch
Session 2: Household Balance Sheets
1:25 pm - 1:35 pm
Virtual - Overview
Monika Piazzesi, Professor of Economics, Stanford University
1:35 pm - 1:40 pm
1:40 pm - 2:10 pm
Virtual - What are the Financial Constraints that Households Face?
Adam Guren, Associate Professor of Economics, Boston University
2:10 pm - 2:15 pm
2:15 pm - 2:45 pm
How Do Households Form Beliefs, for example, about Income and House Prices, and What are the Implications?
Eduardo Davila, Assistant Professor of Economics, Yale University
2:45 pm - 2:50 pm
2:50 pm - 3:20 pm
What are Similarities and Differences Among Different Household Assets and Liabilities? How Do Households’ Choices of Asset and Liability Type Matter for Macro Outcomes?
Anthony DeFusco, Associate Professor of Finance, Northwestern University, Kellogg School of Management
3:20 pm - 3:35 pm
3:35 pm - 4:20 pm
Virtual - Open Discussion Led by Monika Piazzesi
Conference Adjourns for the Day
Friday, October 8, 2021
8:30 am - 9:00 am
Registration and Breakfast
Session 3: Firm Balance Sheets
9:00 am - 9:10 am
Martin Eichenbaum, Professor of Economics, Northwestern University
9:10 am - 9:15 am
9:15 am - 9:45 am
Virtual - What are the Financial Constraints that Firms Face?
Daniel L. Greenwald, Assistant Professor of Finance, MIT Sloan School of Management
9:45 am - 9:50 am
9:50 am - 10:20 am
What is the Role of Firm Balance Sheets in Economic Fluctuations?
Pablo Ottonello, Assistant Professor of Economics, University of Michigan
10:20 am - 10:25 am
10:25 am - 10:55 am
What is the Impact of Increasing Concentration, Rising Intangibles, and Other Changes Among Firms in the Age of the New Economy?
Nicolas Crouzet, Associate Professor of Finance, Northwestern University, Kellogg School of Management
10:55 am - 11:10 am
11:10 am - 11:55 am
Open Discussion Led by Martin Eichenbaum
11:55 am - 12:55 pm
Private Lunch
Session 4: From Micro to Macro
12:55 pm - 1:05 pm
Virtual - Overview
Ricardo Reis, Professor of Economics, London School of Economics
1:05 pm - 1:10 pm
1:10 pm - 1:40 pm
Can Micro Data be Used to Identify Behavioral Elasticities and Build Models of Individual Behavior that Can Be Usefully Aggregated into Macro Models?”
Alp Simsek, Visiting Lecturer, Yale School of Management
1:40 pm - 1:45 pm
1:45 pm - 2:15 pm
What Can Well-Identified Causal Estimates from Micro Data Tell Us About Macro Effects of Policies?
David Berger, Associate Professor of Economics, Duke University
2:15 pm - 2:20 pm
2:20 pm - 2:50 pm
Virtual - Which Empirical Approaches Use Micro Data to Estimate General Equilibrium Effects and How Successful Have They Been?”
Johannes Wieland, Associate Professor of Economics, University of California, San Diego
2:50 pm - 3:05 pm
3:05 pm - 3:50 pm
Virtual - Open Discussion Led by Ricardo Reis
Conference Concludes