While active funds as a whole experience outflows during the crisis, funds that apply exclusion criteria in their investment process receive net inflows. Funds with higher sustainability ratings from Morningstar also receive larger flows, driven especially by environmental concerns. The pre-crisis trend of flows toward sustainability-oriented funds thus continues during the COVID-19 crisis. The fact that investors retain their commitment to sustainability during a major crisis suggests they have come to view sustainability as a necessity rather than a luxury good.
Insights / Research Brief•Jul 26, 2023
Exporting, Global Sourcing, and Multinational Activity: Theory and Evidence from the United States
Pol Antràs, Teresa C. Fort, Evgenii Fadeev, Felix Tintelnot
Multinational firms (MNEs) are more likely to trade not only with countries in which they have affiliates, but also with other countries within their affiliates’ region. These patterns point to firm-level scale economies that arise when the fixed costs to source from, or sell in, a market are shared across all the MNE’s plants.
Topics: Financial Markets
Insights / Research Brief•Jul 20, 2023
Price Level and Inflation Dynamics in Heterogeneous Agent Economies
Greg Kaplan, Georgios Nikolakoudis, Giovanni L. Violante
This work offers new insights into the effects of persistent fiscal deficits on US inflation, revealing that targeted income redistribution during COVID increased short-term inflation significantly. The largest sustainable primary deficit is 4.6% of GDP, or 40% higher than current levels, dependent on how deficit spending is distributed.
Topics: Financial Markets, Monetary Policy
Insights / Research Brief•Jul 06, 2023
Carbon Prices and Forest preservation Over Space and Time in the Brazilian Amazon
Juliano J. Assunção, Lars Peter Hansen, Todd Munson, José A. Scheinkman
With modest transfers per ton of net CO2, Brazil would find it optimal to choose policies that produce substantial capture of greenhouse gasses in the next 30 years, suggesting that the management of tropical forests could play an important role on climate change mitigation in the near future.
Topics: Energy & Environment, Financial Markets