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Insights / Research BriefMay 01, 2024

Access to Credit Reduces the Value of Insurance

Sonia Jaffe, Anup Malani, Julian Reif
Insurance is less valuable when people can also smooth their spending using loans. Access to a five-year loan decreases the average value of insurance by $232–$366, or 58–61%.
Topics:  Financial Markets
Insights / Research BriefMar 25, 2024

Banks in Space

Ezra Oberfield, Esteban Rossi-Hansberg, Nicholas Trachter, Derek Wenning
The banking deregulation of the 1980s and 90s provides unique evidence of the way in which banks set up their branches across locations. Two forms of sorting explain observed location patterns well. Sorting on size, whereby top banks locate in the largest markets and smaller banks in marginal ones, and sorting according to funding needs whereby banks locate in regions that allow them to balance their loans and deposits.
Topics:  Financial Markets
Insights / Research BriefFeb 27, 2024

A Commitment Rule for Insolvency Forum

Anthony J. Casey, Aurelio Gurrea-Martínez, Robert K. Rasmussen
A new commitment rule regarding forums for international insolvency would not only benefit debtors and creditors, but also society at large by supporting the development of financial markets, entrepreneurial innovation, and economic growth.
Topics:  Financial Markets
Insights / Research BriefJan 18, 2024

Refinancing Frictions, Mortgage Pricing and Redistribution

Joseph S. Vavra, David W. Berger, Konstantin Milbradt, Fabrice Tourre
Homebuyers who refinance their mortgages more often end up paying less in the long run than those who rarely refinance. Mortgage reforms can potentially reduce these disparities, but they can also have unintended consequences for the mortgage market.
Topics:  Financial Markets
Insights / Research BriefJan 17, 2024

Asset Demand of U.S. Households

Xavier Gabaix, Ralph S. J. Koijen, Federico Mainardi, Sangmin Oh, Motohiro Yogo
New data on households’ portfolios, including ultra-high-net-worth (UHNW) households, indicate that households play a limited role in stabilizing fluctuations in financial markets.
Topics:  Financial Markets
Insights / Research BriefOct 03, 2023

Private Actions in the Presence of Externalities: The Health Impacts of Reducing Air Pollution Peaks but not Ambient Exposure

Joshua Dean, Susanna B. Berkouwer
Improved cookstoves reduce exposure to peak cooking emissions by 42%, though impacts on overall pollution exposure are muted by high ambient pollution. The reduction in peak emissions reduces self-reported respiratory symptoms but does not improve more quantitative diagnoses such as blood pressure or blood oxygen.
Topics:  Development Economics, Energy & Environment, Health care
Insights / Research BriefJul 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 BriefJul 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