2018-2019 Annual Report (The Julis-Rabinowitz Center for Public Policy & Finance)

The Julis-

Rabinowitz Center for Public Policy & Finance jrc.princeton.edu

2018–2019 ANNUAL REPORT

TABLE OF CONTENTS

1 LEADERSHIP: EXTERNAL ADVISORY COUNCIL 3 FACULTY: 2018–2019 CENTER AFFILIATES 5 FACULTY: RESEARCH, PUBLICATIONS AND NEWS 10 RESEARCHERS: VISITORS, FELLOWS AND POSTDOCTORAL ASSOCIATES 12

RESEARCH INITIATIVES: MACROFINANCE LAB

14

RESEARCH INITIATIVES: WORKSHOPS

15

TEACHING & LEARNING: STUDENT ASSOCIATES

19

TEACHING & LEARNING: PUBLIC POLICY AND FINANCE TRACK

20

TEACHING & LEARNING: FINANCIAL MARKETS FOR PUBLIC POLICY PROFESSIONALS

22

TEACHING & LEARNING: SELECTED COURSES

24

CENTER EVENTS: HIGHLIGHTS

26

CENTER EVENTS: CALENDAR

LEADERSHIP: EXTERNAL ADVISORY COUNCIL The Advisory Council is comprised of distinguished leaders in the financial industry, scholars and policymakers.

PHILIP BENNETT,

of Economics and a Ph.D. from the

worked at USAID. A member of the

European Bank for

University of Chicago.

Council on Foreign Relations and the Inter-American Dialogue, she also

Reconstruction and Development (EBRD). Philip Bennett

WOODY BROCK,

serves on the Boards of Trickle Up,

retired in March 2018 from his position

Strategic Economic Decisions,

Girls, Inc. and the Eurasia Group. A

as a member of the EBRD’s Executive

Inc. President and Founder

graduate of Columbia, she holds an

Committee. In that role he oversaw the

of Strategic Economic Decisions, Inc.,

Client Services Group, which comprises

Horace “Woody” Brock specializes in

the Banking and Policy & Partnerships

applications of the modern “economics

PIERRE M. GENTIN,

department, and chaired the Operations

of uncertainty” (developed by

McKinsey & Company, Inc.

Committee, which reviews all

Stanford’s Kenneth J. Arrow) to

investment proposals. He has more

forecasting and risk assessment in the

General Counsel, Pierre Gentin was a

than 30 years of experience in global

international economy and its asset

partner in the law firm of Cahill

financial markets, primarily with

markets. He has spoken publicly

Gordon & Reindel and spent nearly two

Citigroup and its predecessor

around the globe, including at the

decades at Credit Suisse. Earlier, he

companies, Salomon Brothers and

World Economic Forum in Davos and

served as an Assistant U.S. Attorney

Salomon Smith Barney. A graduate of

his articles have appeared in numerous

for the Southern District of New York.

the University of North Carolina, he

professional journals, The New York

He is a trustee of the Practising Law

holds an M.P.A. from Princeton’s

Times, and the International Herald

Institute and the Touro Synagogue

Woodrow Wilson School and an

Tribune. He holds a B.A., M.B.A., and

Foundation and is co-editor of a book

M.B.A. from the University of Chicago.

M.Sc. from Harvard University, and

on the mediation of complex financial

earned his M.A. in mathematical

services disputes. In 2008, he was

MICHAEL BORDO,

economics and Ph.D. in political

named a Young Global Leader of the

Rutgers University.

philosophy from Princeton.

World Economic Forum and has served

M.P.A. from Princeton.

Before joining McKinsey as

on the Forum’s Global Agenda Council.

Distinguished Professor of Economics and Director of the Center

JOYCE CHANG, JP

He teaches an M.B.A.-level ethics

for Monetary and Financial History at

Morgan Chase & Co.

course at the Wharton School of

Rutgers, Michael Bordo’s research

Currently Global Head of

Business. He graduated from Princeton University and Columbia Law School.

spans economic and financial history,

Research at JP Morgan, Joyce Chang

monetary economics, exchange rate

was previously Global Head of Fixed

regimes, financial crises, and

Income, Emerging Markets and Index

ROBERT A. JOHNSON,

globalization. He has been a Visiting

Research and earlier led Emerging

Institute for New Economic

Scholar at the IMF, the Federal Reserve

Markets and Global Credit Research as

Banks of St. Louis and Cleveland, the

well as Global Currency and

Johnson is Executive Director of INET

Federal Reserve Board of Governors of

Commodities Research. Prior to this,

and currently serves on the UN

the Bank of Canada, the Bank of

she was a Managing Director at BofA

Commission of Experts on International

England, and the Bank for

Merrill Lynch, Research Division, and

Monetary Reform under the

International Settlements. A graduate

Salomon Brothers, specializing in

chairmanship of Joseph Stiglitz. He is

of McGill University, he earned a

emerging markets fixed income

also the director of economic policy for

M.Sc.(Econ) from the London School

research. Before Wall Street, she

the Franklin and Eleanor Roosevelt

Thinking (INET). Robert

1

LEADERSHIP: EXTERNAL ADVISORY COUNCIL

Institute in New York. Previously, he

JOE LONSDALE, Addepar,

JEFFREY SHAFER,

managed a global currency, bond, and

Formation 8. Joe Lonsdale is

JRShafer Insight. Jeffrey

equity portfolio specializing in

CEO of Addepar, an

Shafer is the founder of

emerging markets. He served as chief

emerging leader in private wealth

JRShafer Insight, a strategic advice

economist of the Senate Banking

management technology, and is general

and consulting firm. He was formerly

Committee and senior economist of the

partner at Formation 8, which

vice chair of Citi’s Global Banking and

Senate Budget Committee. Johnson

specializes in growth technology

Senior Asia Pacific Office, under

earned bachelor’s degrees in both

investing. He is board chair for

secretary of the U.S. Treasury for

electrical engineering and economics

ONEHope Wine, co-founder and chair

International Affairs, and he held a

from MIT. He holds a Ph.D. in

of Backplane, and co-chair of Zanbato,

series of high-level positions at the

economics from Princeton.

a leader in global infrastructure fintech.

Organization for Economic Cooperation

In 2004, Lonsdale co-founded Palantir

and Development. He has also worked

MITCHELL R. JULIS,

Technologies, a developer of analysis

at the Federal Reserve Bank of New

Canyon Partners, LLC.

systems used by government and

York, the Federal Reserve Board, and

Mitch Julis is Co-Chairman

financial organizations around the

the Council of Economic Advisors.

and Co-CEO of Canyon Partners, a

world. He earned his B.S. in computer

Shafer holds a B.A. from Princeton and

leading global alternative asset

science from Stanford University.

an M.A. and Ph.D. from Yale.

management firm that specializes in credit-oriented (as well as real estate

DEAN MENEGAS,

BING SHEN, Director, Far

and emerging market debt securities)

Spinnaker Capital Group.

Eastern International Bank.

investments. Prior to forming Canyon,

General counsel for

Bing Shen serves on the

he served as a portfolio director and a

Spinnaker since its inception in 1999,

boards of four public companies and

bankruptcy and creditors’ rights

Dean Menegas oversees all legal and

one private company. Among these, he

attorney. His writing on bankruptcy

regulatory affairs for the group’s

chairs the audit committee and the

and distressed credit investing has been

business across three continents. He is

compensation committee of two

published in law journals and other

also board vice-chair of the Emerging

separate public companies. Previously,

periodicals. He received his B.A. from

Markets Trade Association and

he was President of CDIB & Partners

Princeton’s Woodrow Wilson School

president of the Princeton Association

Investment Holding Corporation,

and earned his J.D. and M.B.A. from

of the United Kingdom. He previously

which manages over $300 million

Harvard’s Law and Business Schools,

served as legal counsel to the Credit

invested in listed securities and private

respectively.

Agricole Indosuez Emerging Markets

equity. He worked for the Morgan

Division and was a corporate associate

Stanley Group in 1987–1999 and was

at Skadden Arps Slate Meagher &

Morgan Stanley’s first Chief

Flom. Menegas holds a B.A. from

Representative in Beijing, China. Prior

Princeton, an M.A. in political science

to this, he worked as an investment

from the University of Michigan, and a

officer in the International Finance

J.D. from the University of Michigan.

Corporation of the World Bank. A graduate of Princeton, he subsequently earned his M.B.A. from Harvard Business School.

2

FACULTY: 2018–2019 CENTER AFFILIATES Faculty Affiliates come from a variety of disciplines, and their research interests include macroeconomics, finance and public policy. Faculty Affiliates attend Center-sponsored events, give invited talks and participate in Center-sponsored teaching, leading to fruitful interactions both among themselves and with the Center’s visitors and student associates.

ATIF MIAN, Center

WILL S. DOBBIE, Assistant

BURTON G. MALKIEL,

Director, John H. Laporte, Jr.

Professor of Economics and

Chemical Bank Chairman’s

Class of 1967 Professor of

Public Affairs

Professor of Economics,

Economics, Public Policy and Finance*

Emeritus

OLEG ITSKHOKI, MARK AGUIAR, Walker

Professor of Economics and

ALEXANDRE MAS,

Professor of Economics and

International Affairs

William S. Tod Professor of

International Finance

Economics and Public Affairs

HAROLD JAMES, Claude YACINE AIT-SAHALIA, Otto A. Hack 1903 Professor of Finance and Economics

and Lore Kelly Professor in

ADRIEN MATRAY,

European Studies, Professor

Assistant Professor of Economics

of History and International Affairs, and Director, Program in Contemporary

NATALIE MARIE BACHAS, Assistant Professor of Economics

European Politics and Society*

NOLAN MCCARTY, Susan Dod Brown Professor

JAKUB KASTL, Professor

of Politics and Public Affairs*

of Economics

ROLAND J.M. BÉNABOU, Theodore A. Wells ‘29 Professor of Economics and Public Affairs

ALAN S. BLINDER, Gordon S. Rentschler Memorial Professor of Economics and Public Affairs*

MARKUS K. BRUNNERMEIER, Edwards S. Sanford Professor of Economics and Director, Bendheim Center for Finance*

MIGUEL A. CENTENO, Musgrave Professor of Sociology, Professor of

ASHOKA MODY, Charles and Marie Robertson Visiting

NOBUHIRO KIYOTAKI, Harold H. Helm ‘20 Professor of Economics and Banking

Professor in International Economic Policy

BENJAMIN MOLL,

HENRIK J. KLEVEN,

Professor of Economics and

Professor of Economics and

International Affairs

Public Affairs

CECILIA E. ROUSE, Dean,

ALAN B. KRUEGER,

Woodrow Wilson School of

Lynn Bendheim Thoman, Class of 1976, and Robert Bendheim, Class of 1937, Professor of Economics and Public Policy, Woodrow Wilson School*

MORITZ LENEL, Assistant

Public and International Affairs and Lawrence and Shirley Katzman and Lewis and Anna Ernst Professor in the Economics of Education, Professor of Economics and Public Affairs*

Professor of Economics

Sociology and International Affairs

* Denotes Executive Committee member.

3

FACULTY: 2018–2019 CENTER AFFILIATES

DAVID SCHOENHERR, Assistant Professor of

LEONARD WANTCHEKON, Professor

and Mary Trumbull Adams

Economics

of Politics and International

Professor for the Study of

Affairs

WEI XIONG, Hugh Leander

Investment and Financial Markets*

ELDAR SHAFIR, Class of 1987 Professor in Behavioral

ARLENE WONG,

MOTOHIRO YOGO,

Science and Public Policy;

Assistant Professor of

Professor of Economics

Professor of Psychology and Public Affairs

Economics

CHRISTOPHER A. SIMS, John F. Sherrerd ‘52 Professor of Economics

Photo: Princeton University, Office of Communications, Denise Applewhite (2017)

4

OWEN ZIDAR, Assistant Professor of Economics and Public Affairs

FACULTY: RESEARCH, PUBLICATIONS AND NEWS The Center supports research at the intersection of public policy, financial markets and the macroeconomy. Over the past year, the Center supported original work in financial economics, political economy and regulation.

FEATURED FACULTY RESEARCH NATALIE MARIE BACHAS, Assistant Professor

ATIF MIAN, Center Director, John H. Laporte, Jr. Class of 1967 Professor of Economics, Public Policy and Finance. Mian’s work explores the connections

of Economics. Bachas’ research focuses on

between finance and the macroeconomy. Building on themes

household finance, industrial organization and

raised in his 2014 book, House of Debt, with Amir Sufi, his

public economics. She received the 2017 Berkeley Department

current research uses county-level data on household borrowing

of Economics Graduate Student Award for Public Policy

and employment to look at the impact of indebtedness on labor

Research and the CPC Dissertation Prize. Her current work

allocation across geographical areas and industries. Another

includes studying the efficiency and equity implications of

strand investigates the link between household debt and

changes in the $1.3 trillion student loan market and the

business cycles worldwide and the role of credit supply shocks.

efficiency of federal loan guarantees. She earned her Ph.D. in

His research has appeared in American Economic Review,

economics from the University of California at Berkeley.

Econometrica, Quarterly Journal of Economics, Journal of Finance, Review of Financial Studies and Journal of Financial

MORITZ LENEL, Pyewacket Research Fellow,

Economics. He holds a Ph.D. in economics from MIT.

Bendheim Center for Finance 2018–2019; Assistant Professor of Economics starting July 1, 2019.

DAVID SCHOENHERR, Assistant Professor of

Lenel’s research interest are in macroeconomics and finance.

Economics. Schoenherr’s research interests include

He has been awarded the Landau Discussion Paper Prize by

financial contracting, political economy, and the

SIEPR in 2017, and the AQR Top Finance Graduate Award

interaction between law and finance. He is particularly

2017. His current research focuses on the impact of

interested in how the design of bankruptcy law affects security

variations in the quantity of safe bonds on asset prices and

prices and investors’ ex ante incentives, for example with respect

lending volume in financial markets, the relationship

to credit allocation decisions, or firms’ financing and investment

between macroeconomic policy and the price of risk, and

decisions. His work examines the role of social and political

how housing policies affect the homeownership rate. Lenel

connections on economic outcomes in different contexts, as well

holds a Ph.D. in economics from Stanford University.

as how informal labor markets affect the incentives of workers in response to changes in unemployment insurance benefits. He

ADRIEN MATRAY, Assistant Professor of

holds a Ph.D. in finance from the London Business School.

Economics. Matray studies corporate finance, entrepreneurship, innovation, and financial inclusion. One strand of research looks at aspects of financial inclusion for low-income households and minorities both in

MOTOHIRO YOGO, Professor of Economics.

Yogo’s fields of expertise are financial economics, insurance, and econometrics. His current research is

the U.S. and in developing countries. A second strand

on the implications of institutional demand for asset prices and

investigates the frictions affecting entrepreneurship, SME

on risk and regulation of the insurance industry. He has

growth and technology adoption and how new technologies

published in American Economic Review, Econometrica, Journal

affect SME productivity, employment and income growth.

of Political Economy, Journal of Finance, Journal of Financial

Ongoing work (with Johan Hombert) studies how different

Economics and Review of Financial Studies. Recognition for his

type of asset bubbles (technological bubbles versus house

work includes the Richard A. Crowell Memorial Prize, the

prices bubbles, for instance) affect worker allocation and can

Roger F. Murray Prize and the Zellner Thesis Award. He

distort the economy. Matray earned his doctorate from HEC

earned his doctorate from Harvard and was a research

Paris.

economist at the Federal Reserve Bank of Minneapolis.

5

FACULTY: RESEARCH, PUBLICATIONS AND NEWS

BOOKS

SCHOLARLY PAPERS

ASHOKA MODY’s book Euro Tragedy: A

ATIF MIAN’s work with Amir Sufi was recently published

Drama in Nine Acts was listed among the five best

in the Journal of Economic Perspectives. The paper, “Finance

business and economics books of 2018 by The

and Business Cycles: The Credit-Driven Household

Economist. It was also chosen by both Foreign

Demand Channel,” answers the question “What is the role

Affairs and The Financial Times as one of the best books of

of the financial sector in explaining business cycles?” The

2018. The book is a comprehensive and authoritative history

specific idea put forward in the article is that expansions

of the euro. The Economist says the book “laments the

in credit supply, operating primarily through household

intellectual failures present at the foundation of the single

demand, have been an important driver of business cycles.

currency area and in the mishandling of the response to the

The authors call this the credit-driven household demand

sovereign-debt crisis after 2010.”

channel. They conclude that while the channel helps explain the recent global recession, it also describes economic cycles

E. GLEN WEYL’s book Radical Markets,

in many countries over the past 40 years.

Uprooting Capitalism and Democracy for a Just Society, written with Eric A. Posner, was also in

ADRIEN MATRAY’s paper “Can Innovation Help U.S.

The Economist’s five best business and economics

Manufacturing Firms Escape Import Competition from

books for 2018 and one of Bloomberg Businessweek’s

China,” joint work with Johan Hombert, was published in

“Bloomberg 50” Icons of 2018. Many blame today’s

the Journal of Finance. The paper analyses whether R&D-

economic inequality, stagnation and political instability on

intensive firms are more resilient to trade shocks. It finds that

the free market. The solution is to rein in the market, right?

while rising imports from China lead to slower sales growth

Radical Markets turns this thinking—and pretty much all

and lower profitability, these effects are significantly smaller

conventional thinking about markets, both for and against—

for firms with a larger stock of R&D (by about half when

on its head.

moving from the bottom quartile to the top quartile of R&D).

ALAN BLINDER’s book Advice and Dissent,

MOTOHIRO YOGO’s paper with Ralph Koijen of NYU

Why America Suffers When Economics and Politics

Stern, “A Demand System Approach to Asset Pricing”

Collide discusses the crucial cultural divide that

is forthcoming in the Journal of Political Economy. The

separates economic and political civilizations.

authors develop a model with flexible heterogeneity in asset

Blinder shows how both sides can shrink the yawning gap

demand across investors, designed to match institutional

between good politics and good economics and encourage

and household holdings. Using U.S. stock market data, they

the policies America so desperately needs.

illustrate how the model could be used to understand the role of institutions in asset market movements, volatility and

MARKUS BRUNNERMEIER and HAROLD JAMES’ acclaimed book The Euro and the Battle

predictability.

of Ideas was translated to Chinese, German,

DAVID SCHOENHERR’s paper “Political Connections and

Italian, Spanish and Ukrainian.

Allocative Distortions,” published in the Journal of Finance, uses data from Korea to examine the effects of government procurement contracts being influenced by firms’ political connections. Schoenherr’s paper “Rent Seeking in Elite

6

FACULTY: RESEARCH, PUBLICATIONS AND NEWS

Networks” with Rainer Haselmann and Viikrant Vig was published in the Journal of Political Economy. Using a unique

NEWS

data set on members of an elite service club in Germany, the

NEW FACULTY AFFILIATES

authors investigate how social connections in elite networks

Natalie Marie Bachas is an Assistant Professor at Princeton

affect the allocation of resources.

University.

ERNEST LIU’s work with ATIF MIAN and Amir

Moritz Lenel is the Pyewacket Research Fellow, Bendheim

Sufi entitled “Low Interest Rates, Market Power, and

Center for Finance and will be Assistant Professor of

Productivity Growth” examines how the production side of

Economics starting July 1, 2019.

the economy responds to a low interest rate environment.

The paper shows that low interest rates encourage

Owen Zidar is Assistant Professor of Economics and Public

concentration by giving industry leaders a strategic

Affairs and a research fellow at the National Bureau of

advantage over followers. The work was reported in The

Economic Research.

Wall Street Journal. Liu’s paper “Industrial Policies in Production Networks,” uses production network theory

PROMOTIONS

to understand industrial policies. He finds that there is a

Benjamin Moll was promoted to Professor of Economics

strong incentive for a well-meaning government to subsidize

and International Affairs. His research lies at the intersection

upstream sectors. He develops a sufficient statistic that

of macroeconomics and development economics.

predicts the sectors targeted by government interventions in South Korea in the 1970s and in modern day China. A

AWARDS

summary of the paper appeared in VoxDev.

Mark Aguiar and Leonard Wantchekon were elected as

KARSTEN MÜLLER with co-author Carlo Schwarz has investigated the link between social media and hate crime using Facebook and twitter data. The paper, “Fanning the Flames of Hate: Social Media and Hate Crime,” studies the rise of anti-refugee sentiment in Germany. A related paper, “Making America Hate Again? Twitter and Hate Crime Under Trump,” focuses on hate crimes in the U.S. using twitter data. This work has been widely cited in the press including The New York Times, The Guardian, The Economist and Financial Times. Another strand of Müller’s recent work looks at the political economy of finance. The paper “Electoral Cycles in Macroprudential Regulation” finds a robust and sizable electoral cycle in the use of macroprudential tools around 212 elections in 58 countries over the 2000–2014 period. In the paper “Busy Bankruptcy Courts and the Cost of Credit,” Müller finds that the efficiency of legal enforcement is an important factor for

Fellows of the Econometric Society.

Alexandre Mas was named the William S. Tod Professor of Economics and Public Affairs.

Benjamin Moll won the 17th Edition of the Bernácer Prize, awarded annually to European economists under the age of 40 who have made outstanding contributions in the fields of macroeconomics and finance. Moll also won, together with Greg Kaplan and Gianluca Violante, the award for economics in central banking for the paper “Monetary Policy according to Hank.” The work adds to the realism of core economic models by allowing for differences in households’ liquid and illiquid assets.

Roland Bénabou was elected to the Institute de France, Académie des Sciences Morales et Politiques.

credit spreads and contract maturities.

7

FACULTY: RESEARCH, PUBLICATIONS AND NEWS

AFFILIATES IN THE NEWS

Markus Brunnermeier

Alan Blinder

Nobuhiro Kiyotaki

zzAlibaba initiates the open research

zzFederal Reserve chair Powell ’75

zzTrade war poised to roil global finance: Debt-burdened Japan needs fiscal reform to stave-off “collapse” — Nikkei Asian Review

Atif Mian zzHow low interest rates can freeze the economy — The Wall Street Journal zzWhat’s got U.S. inflation so depressed? Just asking for the Fed — Bloomberg zzLow rates can harm productivity — Central Banking zzWeak economic growth? Blame the Polar Vortex — Barron’s zzNegative rates would have speed up

clashes with Trump — The Daily

— PRNewswire

Princetonian

zzDilip José Abreu: an elegant and creative economist — livemint zzGhosts of history: Lessons for US-China trade war — livemint zzPreventing the next housing crisis — DSnews zzBitcoin has taught us many lessons on financial bubbles — The National zzEurobonds of mistrust — Financial Times zzEuropean union and divisions — La Vie des idées zzPulling rabbits out of hats: How a

economic recovery, Fed Paper Says

decade of crisis changed economics

— The Wall Street Journal

— Jacobin

zzFixing Pakistan’s financial woes — Dawn zzThe real engine of the business cycle — Project Syndicate zzAn alternative view of boom and bust cycles — Barron’s zzCredit expansion is the real cause of booms and busts — MarketWatch zzFinancial panic and credit disruptions in the 2007-09 crisis — Brookings

8

platform “Luohan Academy”

Harold James zzThe ghosts of Versailles — Project Syndicate zzItaly’s writing on the wall — Project Syndicatee zzThe ghost of Brexit past — Project Syndicate zzWhat Lehman Brother’s failure means today — Project Syndicate zzThe beginning of the end of Britain’s Brexit fantasy — Foreign Policy

zzThe Free Trade Paradox — Foreign Affairs zzAdvice and Dissent, by Alan Blinder — Financial Times zzWhy politicians and economists often don’t get along — The Washington Post zzEx-Fed vice chair Blinder to Trump: Hiking rates gradually from historic lows won’t choke economic growth — CNBC zzAlan Blinder on how bad economics so often makes for good politics — American Enterprise Institute zzIs the Phillips Curve Dead? And other questions for the Fed — The Wall Street Journal

Will Dobbie zzBlack and white bail judges show bias against black defendants — Journalist’s Resource zzMost Americans can’t catch the same kind of cash bail breaks as Harvey Weinstein — Thinkprogress

Henrik Kleven zzHow Econ went from Philosophy to Science — Bloomberg Opinion

FACULTY: RESEARCH, PUBLICATIONS AND NEWS

Alan Krueger

Ashoka Mody

zzA debt crisis is coming. But

zzThank goodness British governments

don’t blame entitlements. — The

were too cowardly to take the UK

Washington Post

into the euro — Independent

zzThe Freedom to Leave — Center for American Progress zzCorporate America is Suppressing Wages for Many Workers — The New York Times zzFor women who attend elite colleges, pay and marriage have ups and downs — The Washington Post

zzLagging: Ireland below European average when it comes to research

zzYes, you can outmuscle Chinese imports through Innovation and R&D — Forbes

zzHow the shutdown might end, according to game theory — PBS NewsHour zzMidterms 2018: A Divided Congress — Yahoo Finance

zzIt’s hard to short crypto — and that’s propping up prices, study finds — coindesk

Motohiro Yogo

— Independent

zzWhy annuities may be safer than

zzAngela Merkel’s Tragedy — Project Syndicate

Benjamin Moll Kaplan, Benjamin Moll and Gianluca Violante — Central Banking

Leonard Wantchekon zzIt ended in 1767, yet this experiment

Nolan McCarty

the 2008 crisis — Bloomberg Opinion

and development spending

zzEconomics in central banking: Greg

Adrien Matray

zzWhat economists still don’t get about

is still linked to higher incomes and education levels — The Washington Post (wonkblog)

you think — The Wall Street Journal (blog)

Owen Zidar zz“Working rich” prevail among today’s top earners — phys.org

VIDEO PRESENTATIONS zzNobel Symposium — Atif Mian on “The Credit Driven Household Demand Channel” zzNobel Symposium — Markus Brunnermeier on ”Leverage and Cycles”

Wei Xiong zzAlibaba Initiates the Open Research Platform “Luohan Academy”

zzNobel Symposium — Nobu Kiyotaki on “Inside Money and Liquidity”

— Newswire

9

RESEARCHERS: VISITORS, FELLOWS AND POSTDOCTORAL ASSOCIATES The Center hosts outstanding researchers and practitioners at any career stage working at the intersection of finance and public policy. Researchers join the Center as Postdoctoral Research Scholars, Visiting Fellows, or Graduate Exchange Students.

DONAL BYARD, Lecturer

Relations. He is an Associate Fellow of

which are the most relevant constraints

in Economics. Donal Byard is

Ezra Stiles College, Yale University and

they face and what is the optimal

a Professor of Accounting at

a Chazen Professional Fellow at

design of local financial institutions

Columbia Business School.

(i.e., central bank discount rates,

Baruch College, City University of New

interbank markets, liquidity

York (CUNY). He earned a Ph.D. in accounting from the University of

DANA FOARTA, Visiting

management technology, financial

Maryland and specializes in teaching

Research Scholar. Dana

regulation, deposit insurance, etc).

financial accounting. His research has

Foarta is Assistant Professor

been published in journals such as the

of Political Economy at the Stanford

ERNEST LIU, Postdoctoral

Journal of Accounting Research, The

Graduate School of Business. Her

Research Associate. Ernest

Accounting Review and Contemporary

research examines the links between

Accounting Research; he also serves on

political economy and financial

Research Associate in the Julis-

the editorial advisory board for a

regulation. It focuses on the

Rabinowitz Center for Public Policy &

number of accounting academic

coordination of government policies

Finance at the Woodrow Wilson School

journals. In 2008–2009, he served as

within banking unions, on the links

and at the Simpson Center in the

an academic fellow in the Chief

between local and supranational

Economics Department. He studies the

Accountants Office of the U.S.

regulation and the design of regulatory

implications of weak financial

Securities and Exchange Commission.

institutions. Her current work examines

institutions for economic growth,

information transmission between

allocation of resources, and economic

JEAN-CHRISTOPHE DE SWAAN, Lecturer in

regulators and its implications for the

development. He has done work that

structuring of regulatory institutions.

uses production network theory to

Economics. Jean-Christophe

Dana received her Ph.D. in economics

understand industrial policies,

de Swaan is a lecturer in the Economics

from MIT and her B.A. in economics

specifically the strong government

Department at Princeton University.

and mathematics from Amherst

support for upstream industries that are

He teaches courses on ethics in finance

College.

widely adopted in developing economies. His other work shows how

and Asian capital markets, and acts as a faculty adviser to freshmen and

NICOLA LIMODIO,

low long-term interest rates encourage

sophomore students. He also teaches at

Visiting Fellow. Nicola

market concentration and slow down

Limodio is a Visiting Fellow

productivity growth; how financial

the Judge Business School at the

10

Liu is a Postdoctoral

University of Cambridge. He is a

at the Economics Department and the

market imperfections not only distort

Partner at Cornwall Capital, a multi-

Julis-Rabinowitz Center for Public

economic allocations via

strategy global investment fund based

Policy & Finance at Princeton

underinvestment, but may have much

in New York. He received his B.A.

University. He received his Ph.D. in

amplifying effects due to the

from Yale University in Political

economics from LSE and joined the

interactions across economic sectors or

Science, an MPhil in International

Finance Department of Bocconi

because the relationships between

Relations from the University of

University in 2017. His research

borrowers and lenders create

Cambridge, and a master’s in Public

focuses on banking, corporate finance

underdevelopment traps. He received

Policy from Harvard University’s

and development economics. He is

his Ph.D. in economics from MIT.

Kennedy School of Government. He is

particularly interested in researching

a Member of the Council on Foreign

the role of banks in emerging markets,

RESEARCHERS: VISITORS, FELLOWS AND POSTDOCTORAL ASSOCIATES

KARSTEN MÜLLER,

mechanisms to create a richer and more

Postdoctoral Research

equal society. He is Founder and

CARL CHRISTIAN KONTZ is a Senior

Associate. Karsten Müller’s

Chairman of the RadicalxChange

Research Specialist at the

research focuses on finance,

Foundation, as he continues his

Julis-Rabinowitz Center for Public

macroeconomics and political economy.

research as Principal Researcher at

Policy & Finance. He joined the center

One line of his work addresses the

Microsoft Research New York City. He

in July 2018. Prior to this, he

causes and consequences of the

earned his A.B., M.A. and Ph.D. in

completed a M.Sc. in International

allocation of credit in the economy.

economics at Princeton. He spent three

Trade, Finance, and Development at

Using novel historical data, he has

years as a Junior Fellow at the Harvard

the Barcelona Graduate School of

documented a striking shift in lending

Society of Fellows and three years as an

Economics and a B.Sc. in economics

away from firms towards households all

Assistant Professor at the University of

from the University of Hamburg. He

over the globe. He has also shown that

Chicago before joining Microsoft

previously worked with BDO and as a

the types of financial regulations put in

Research. He is a Sloan Research

research assistant with the University

place after the financial crisis of 2007–

Fellow 2014-2019.

of Hamburg. His research interests lie in macroeconomics, finance and

2008 are subject to powerful electoral cycles. He has also studied the effects of inefficient bankruptcy courts and banking deregulation on credit

PRE-DOCTORAL RESEARCHERS

contracts in the U.S. His second stream

NICOLAS ANDREOULIS

of research—focusing on social media,

is a Senior Research

populism and hate crime—has been

Specialist at the Julis-

featured widely in international news

Rabinowitz Center for Public Policy &

outlets. Müller earned his Ph.D. in

Finance. He holds an M.Sc. in

business and management from the

economics from University College

University of Warwick.

London. He has been especially interested in econometrics and

E. GLEN WEYL, Visiting Research Scholar. Glen Weyl’s work draws on ideas from political economy to develop social technology for widely shared prosperity and social cooperation. His recent book with Eric A. Posner, Radical Markets:

macroeconomics, with a particular focus on the impact evaluation of macroeconomics policies. Before coming to Princeton, he worked as a research and teaching assistant at the London School of Economics and the Institute of Fiscal Studies.

growth.

JULIO ROLL is a Senior Research Specialist at the Julis-Rabinowitz Center for Public Policy & Finance. Prior to joining the center, he received a master’s in economics at the University of Chicago. He also holds a bachelor’s degree in economics from the University of Lyon II, a bachelor’s in Mechanical Engineering from the Polytechnic School of the University of São Paulo, and a master’s in Mechanical Engineering from the École Centrale de Lyon. He also worked at Goldman Sachs for one year in São Paulo. His research interests are

Uprooting Capitalism and Democracy

primarily in macroeconomics,

for a Just Society, ties together much of

innovation and finance.

his recent work on using market

11

RESEARCH INITIATIVES: MACROFINANCE LAB The Center provides funding and support for faculty, postdoctoral associates, visiting scholars and doctoral students doing research at the intersection of macroeconomics, finance and public policy.

A

n initiative of the Julis-Rabinowitz Center, the Macrofinance

Lab (macrofinance.princeton. edu) is dedicated to the study of the connections between finance and the macroeconomy. The lab encourages employing advanced micro-empirical techniques and microeoconomic data sets to test economic models in order to answer fundamental questions about the interaction of finance and the macro economy.

The lab brings together faculty, postdoctoral researchers, graduate and undergraduate students to collaborate on macrofinance empirical projects.

It supports student research from its conceptual/idea stage to publishable product, which includes zzconvening regular informal research brainstorming/early ideas meetings (twice per semester) zzfacilitating access to data sources by exploiting the lab’s connections with outside institutions (e.g., Central Banks) zzfunding summer research, data acquisition and conference travel cost for students zzmatching advanced graduate students with qualified undergraduate research assistants

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Photo: Princeton University Office of Communications

RESEARCH INITIATIVES: MACROFINANCE LAB

DISSERTATION FELLOWS 2017–2018 NAME

PROJECT

DATASET

Terry Moon

Capital Gains Tax, Investments, and CEO Incentives

Financial, accounting, and ownership data for publicly traded and private firms in Korea

Emil Verner

Household Debt Revaluation and the Real Economy: Evidence from a Foreign Currency Debt Crisis

Hungarian individual level credit bureau data, firm level credit bureau data, employeremployee data

Julia Fonseca

Interest Rates, Credit Access, and Repayment: Evidence from Peer-to-Peer Lending

NY Federal Reserve Consumer Credit Panel

Julia Fonseca

Access to Credit and Financial Health: Evaluating the Impact of Debt Collection

NY Federal Reserve Consumer Credit Panel

Yann Koby

Low in Japan

Corporate financial data on Japan’s banks

Christian Wolf

Effects of Direct Investment Stimulus in a Financial Recession

Microlevel firm data

Monetary Policy Shocks and the Banking System

Household and bank microdata for the US

Yann Koby & Christian Wolf

AFFILIATED FACULTY, RESEARCHERS AND STUDENTS FACULTY

POSTDOCTORAL RESEARCHERS

PH.D. STUDENTS

Natalie Marie Bachas

Ernest Liu

Patrick Agte

Yann M. Koby

Moritz Lenel

Karsten Müller

Francisco Cabezon

Terry Moon

Adrien Matray

Juan Manuel Castro

Daniel Morrison

Atif Mian

Julia Fonseca Duarte

Don Noh

David Schoenherr

Abhishek Gaurav

Shumiao Ouyang

Arlene Wong

Faizaan Kisat

Christian K. Wolf

Binyamin Kleinman

Kecy Wu

Thomas Kroen

Fangyuan Yi

Kwok Hao Lee

Haiyue Yu

Dake Li

Jason Zhang

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RESEARCH INITIATIVES: WORKSHOPS

ECONOMIC HISTORY WORKSHOP A new initiative of the Julis-Rabinowitz Center, the

FINANCIAL ECONOMICS OF INSURANCE WORKSHOP

Economic History Workshop (ehw.princeton.edu) at

The inaugural Financial Economics of Insurance Workshop

Princeton University is a monthly seminar series dedicated

(insurance.princeton.edu) took place at Princeton

to the study of economic history. Co-sponsored by the

University on June 8–9, 2018. The goal of the workshop

Department of History, the workshop provides an open

is to highlight the importance of the insurance sector

forum for faculty, scholars, and students to discuss research,

(outside of health) and to develop a unifying framework

ideas, and historiographical methodologies within the field

to think about supply and demand in insurance markets.

of economic history, broadly construed.

The workshop is for Ph.D. students, and attendance was by invitation only. Thirty-three students from 11 top universities from all over the United States participated in

AFFILIATED FACULTY Jeremy Adelman, Henry Charles Lea Professor of History

the workshop. The workshop will be held again next year.

Funding is provided by the National Science Foundation and the Bendheim Center for Finance.

Leah Boustan, Professor of Economics Harold James, Claude and Lore Kelly Professor in European Studies; Professor of History and International Affairs Michael Bordo, Professor of Economics and Director of the Center for Monetary and Financial History at Rutgers University (external)

AFFILIATED STUDENTS Lianne Hewitt, Coordinator

Robert Yee, Coordinator

Zehra Ahmed

Lukas Althoff

Friedrich Asschenfeldt

Adhitya Dhanapal

Jack Guenther

Peter Koczanski

Robert Konkel

Pablo Pryluka

Jonathan Raspe

Neel Thakkar

Peng Wang

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AFFILIATED FACULTY Motohiro Yogo, Professor of Economics, Princeton University Ralph S. J. Koijen, AQR Capital Management Professor of Finance and Fama Faculty Fellow, University of Chicago, Booth School of Business

TEACHING & LEARNING: STUDENT ASSOCIATES The Julis-Rabinowitz Center for Public Policy & Finance’s Student Associates program for undergraduates and graduate students fosters collaboration between students and faculty in order to enhance learning and research about financial markets.

T

his year, the Center’s Student Associates program drew

and the FCC Commissioner), Central Bankers (the President

close to 65 undergraduates and 10 graduate students,

of the Cleveland Fed) and financial industry leaders

who enjoyed unparalleled opportunities to interact with

(sanctions finance panel).

center-affiliated faculty, contribute to research, and meet high-profile speakers and visitors from the government,

In 2018 the Center funded five undergraduates to pursue

academia, and industry. While the majority of associates are

summer internships, two of the students were undergraduate

economics majors, a number come from other disciplines

associates. Tiger Gao worked with a team of economists on

including chemical engineering, history, politics, operations

a range of topics including the stability of the Eurozone and

research, and public and international affairs (WWS).

the influence of immigration on extreme voting. Luca Rade,

With the Center’s support, associates invite speakers, hold workshops, and initiate research projects related to financial markets, macrofinance, macroeconomics, and public policy.

Over the past year, the associates invited seven speakers at four events, organized a conference on Global Governance U.S.-China, developed a podcast show, held a mentoring event, organized three lunch time informal discussions and pursued independent research and summer internships in the public and non-profit sectors. The Associates brought to campus prominent government officials (the SEC Chairman

attended the Santa Fe Institute’s Complex Systems Summer School to learn the fundamentals and practice of complex systems scholarship.

The podcast Policy Punchline founded by undergraduate associates with Center support aims to promote policy-related discussions with scholars, policy makers, business executives and entrepreneurs across all fields. The first episodes feature interviews with Center-invited speakers including Christopher Marks *96, Bill Janeway ’65, Matthias Thiemann, Glen Weyl ’07 and Ashoka Mody.

Student associates, faculty, researchers and staff at the Center’s end-of-year lunch.

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TEACHING & LEARNING: STUDENT ASSOCIATES

CURRENT UNDERGRADUATE ASSOCIATES Bassam J. Alalawi ‘19

David Garfunkel ‘20

Reed Melchionda ‘19

Brandon Tan ‘19

Sarel B. Anbar ‘21

Nicholas Garvey ‘20

Brandon M. Mintzer ‘20

Ricardo Talini Lapi, ‘21

George H. Baughan ‘21

George Grealy ‘19

Emiri Morita ‘21

Sophia E. Taylor ‘20

Jacob Berman ’20 (Vice-Chair)

Eric Guerci ‘21

Maharan Murshed ‘21

Stephanie Hu ‘21

Mouhamed Ndiaye ‘22

Charles H. Thompson ’21 (Events Director)

Rohan Joshi ‘21

Scott R. Newman ‘21 Max W. Parsons ‘20

Adam Chang ‘20

Abhiram Karuppur ’19 (Chair)

Hamza Chaudhry ‘19

Ethan Katz ‘21

Audrey Cheng ‘20

Blaykyi Kenyah ‘19

Will Crawford ‘20

Ian Kim ‘19

Allen Dai ‘22

Julie E. Kim ‘21

Kiara V. Rodriguez Gallego ‘19

Leland Domaratzky ‘22

Sean Kim, ‘21

Eitan Sapiro-Gheiler ‘19

Mohammed K. Elzubeir ‘22

Tom W. Kingori ‘19

Samantha Shapiro ‘21

Marina T. Finley ‘19 (Undergrad Mentor)

Jonathan Lam ‘20

Rebecca Sobel ‘19

Jean (Yoon Jee) Lee ‘19

Caleb South ‘20

Brandon S. Lee, ‘19

Bradley Spicher ‘20

Sophia Lewandrowski ‘22

Gabriel D. Swagel ‘19

Roxana Biglari ‘20 William Chamberlain ‘21

Miaokuan (Tiger) Gao ’21 (Outreach Director)

Luca T. Rade ‘19 Andre Radensky ‘21 Nicholas Ritter ‘20

Tammy Tseng ‘19 Christopher Walton ‘21 Cathy Wu ‘21 Jason Xu ‘20 Cara Yi ‘19 Alis Yoo, ‘19 Kevin Yu ’20 (Director of Special Projects) Kyle J. Zelenitz ‘21 Eric Zhao ‘20 Julia M. Zielczynska, ’19 (Vice-Chair)

2018–2019 GRADUATE ASSOCIATES

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Patrick T. Brown, MPA-Domestic Policy

Alex Kaufman, MPA-Economics & Public Policy

Anthony Chase, MPA-Domestic Policy

Paul Nix, Ph.D. Student, WWS

Pat W. Farrell, MPA-Economics & Public Policy

Bunmi Otegbade, MPP-Economics & Public Policy

Joelle Gamble, MPA-Economics & Public Policy

Brody Viney, MPA-Economics & Public Policy

Liane M. Hewitt, Ph.D. Student, History Department

Robert A. Yee, Ph.D. Student, History Department

TEACHING & LEARNING: STUDENT ASSOCIATES

UNDERGRADUATE ASSOCIATES CLASS OF 2018 Idir Aitsahalia** (Economics)

Benjamin Lei (Economics)

Brandon Tan*** (Economics)

Sara Diressova+ (Economics)

Sam Maeglin** (Politics)

Benjamin J. Tso *+ (Economics)

Christina Huang***+(Computer Sciences)

Vishan Nigam*** (Economics)

Diego Vives*+ (Economics)

Shriya Sekhsaria***+ (Psychology)

Gavin Zhang**+ (Economics)

Bryce Keller (Economics)

Benjamin Sender***+ (Economics) *** Highest Honors, ** High Honors, *Honors, +Certificate of Finance

PRIZES AND AWARDS WINNERS Edward E. Jones Memorial Prize: Graduating student whose senior thesis is judged to be the most outstanding work in social psychology, broadly construed.

Winner: SHRIYA SEKHASARIA (Advisor: Emily Pronin)

Howard Crosby Warren Senior Prize in Psychology: Senior concentrators in psychology selected by the department as the most worthy recipients on the basis of scholarly attainment and good character.

Winner: SHRIYA SEKHASARIA (Advisor: Emily Pronin)

Halbert White ’72 Prize in Economics: Most outstanding senior economics major, as evidenced by excellence in departmental coursework, and creativity in the junior papers and senior thesis.

John Glover Wilson Memorial Award: The best thesis on international economics or politics.

Winner: DIEGO VIVES (Advisor: Chris Sims)

Winner: BRANDON TAN (Advisor: Leah Boustan) Undergraduate Research Forum: Awarded annually to the five best senior thesis in economic policy.

Winner: GAVIN ZHANG (Advisor: Iqbal Zaidi)

HONOR SOCIETY: PHI BETA KAPPA

HONOR SOCIETY: SIGMA XI

Brandon Tan

Christina Huang

Shriya Sekhasaria Vishan Nigam

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TEACHING & LEARNING: STUDENT ASSOCIATES

CLASS OF 2018 UNDERGRADUATE THESES

Economy of Structural Change and Urbanization.

A requirement for a bachelor of arts is the senior thesis

VISHAN NIGAM, Advisor: Henrik Kleven. Local

which provides Princeton students the opportunity

Immigration Enforcement and Police Behavior at Traffic

to develop their scholarly interest and to evolve as

Stops: Evidence from the Texas Highway Patrol.

SAM MAEGLIN, Advisor: John Londregan. The Political

independent thinkers. The students work one-on-one with a faculty member who guides them through the process.

Undergraduate Associates of the class of 2018 researched a wide variety of topics in their theses ranging from the effects of quantitative easing, the consequences of local immigration enforcement and police behavior, the impact of unionization, to the effects of creating memory jars. The topics reflect the varied interests of this exceptional group of young thinkers who are soon to enter careers in finance or public policy, launch their own startup or continue their studies in law or pursue Ph.D.s in economics.

IDIR AITSAHALIA, Advisor: Jakub Kastl. Low Fares Done Wright: Airline Responses to Low-Cost Entry Following Regulatory Changes.

SARA DIRESSOVA, Advisor: Chris Sims. Vector Autoregressive Modeling of Interest Rate Shocks on Bank Balance Sheets: A Comparative Study.

BRYCE KELLER, Advisor: Giorgia Barboni. The Effect of an Aging Population on the Labor Force Participation of Women in the United States.

BENJAMIN LEI, Advisor: Kelly Noonan. Population Control in China: The Effect of Regional Variations in One-Child Policy Enforcement on Parental Investment in Children.

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SHRIYA SEKHASARIA, Advisor: Emily Pronin. Let’s Start with Forever: Counterintuitive Effects of Writing and Reading Own and Others’ Memories.

BEN SENDER, Advisor: Harold T. Shapiro. Predicting the Accuracy of Earnings Forecasts Using Machine Learning.

BRANDON JOEL TAN, Advisor: Leah Boustan. The Impact of Unionization on Industry Adoption of Labor Saving Technologies: A Machine Learning Approach.

BENJAMIN J. TSO, Advisor: Nobuhiro Kiyotaki.

Investigating Abe’s Third Arrow: The Effect of Japanese Corporate Governance on Firm-Level TFP and Company Performance.

GAVIN ZHANG, Advisor: Iqbal Zaidi. Bayesian Estimation of a Medium-Scale DSGE Model of China.

TEACHING & LEARNING: PUBLIC POLICY AND FINANCE TRACK Through the Bendheim Center for Finance, undergraduates in any department may earn a certificate in finance.

Knowledge of modern finance complements many other topics in economics and public policy, including exchange rates and international capital flows, monetary and fiscal policy, the role of financial reform in developing and transition economies, regulation and taxation, and anti-trust policy.

N

ow in its 20th year, the Undergraduate Certificate in Finance offers students majoring in any department

the opportunity to demonstrate their proficiency in the discipline. Eighty students earned certificates in the Class of 2018. Currently there are 65 juniors and 95 seniors

PUBLIC POLICY AND FINANCE TRACK AT A-GLANCE ECO361: Financial Accounting

enrolled in the program. About 75 percent of the students

ECO491: Cases in Financial Risk Management

are drawn from the economics and the operations research

ECO492: The Rise of Asian Capital Markets

departments.

ECO493: Financial Crises

Students can opt to follow the public policy and finance

WWS340: Psychology of Decision Making/Judgment

track which was introduced in 2014–2015. The track focuses

WWS466: Financial History

on the interaction between finance and policy, including

WWS582f: Topics in Economics – House of Debt: Understanding Macro & Financial Policy

public finance, responses to financial crises, central banking, and regulation.

The certificate has four requirements:

REQUIRED CORE COURSES FOR ALL CERTIFICATE PROGRAM PARTICIPANTS ECO362: Financial Investments

zzThere are prerequisites in mathematics, economics, and probability and statistics, as necessary for the study of

ECO363: Corporate Finance and Financial Institutions

finance at a sophisticated level. Advance planning is essential as these courses should be completed prior to the junior year. zzTwo required core courses provide an integrated overview and background in modern finance. zzStudents are required to take three elective courses. zzA significant piece of independent work must relate to issues or methods of finance. This takes the form of a senior thesis, or for non-ECO or ORF majors only, if there is no possibility of finance content in their senior thesis or junior paper, a separate, shorter piece of independent work is required instead.

19

TEACHING & LEARNING: FINANCIAL MARKETS FOR PUBLIC POLICY PROFESSIONALS This signature short course, created in response to the 2008 global financial crisis, is an important part of the curriculum for master’s of public administration and master’s of public policy students at the Woodrow Wilson School.

N

ow in its ninth year, the intensive three-day “ShortCourse: Financial Markets for Public Policy

Professionals” provides a framework for future public policy professionals to understand the operations of financial institutions, the economic purposes they serve, the markets in which they deal and the regulatory environment in which they operate.

2018 PROGRAM & SPEAKERS UNDERSTANDING THE LANGUAGE OF FINANCE (SEPTEMBER 5) Accounting for Policy Makers: Donal Byard, Zicklin School of Business, Baruch College

Since its inception in the fall of 2010, the course has

FRAMEWORK FOR UNDERSTANDING FINANCIAL MARKETS (SEPTEMBER 6–7)

covered the basics of securities, credit markets, mortgages,

Treasury & Credit Markets: Michael Johannes, Columbia

and derivatives taught by faculty from Columbia Business

Business School

School and Princeton University, government officials and financial industry executives. The core curriculum is complemented by a series of lectures and panel discussions that have evolved over time and include topics such as

Mortgages & Derivatives: Michael Johannes, Columbia Business School Financial Crises: Atif Mian, Princeton University

cryptocurrencies and Dodd-Frank legislation. To familiarize students with the language of finance, Visiting Professor

SELECTED TOPICS IN FINANCE (SEPTEMBER 8)

Donal Byard of Baruch College provided an overview of

Municipal Bond Markets: RJ Gallo, Senior Portfolio

accounting for policymakers.

Manager, Senior Vice President, Head of Municipal Bond Investment Group, Federated Investors

This year’s course ended with a panel discussion on financial regulation. One of the panelists, Kathryn Judge, Professor of Law at Columbia Law School, addressed the issue of

Managing Director of The Carlyle Group

information gaps in the financial regulatory architecture.

Two to Tango: Private Equity’s Partnership Model: Noah

In her view, the course is a valuable effort in helping policy

Gottdiener, CEO, President, and Chairman of the Board of

practitioners become conversant with finance. “I see these

Duff & Phelps

issues as critical and, far too often, not well understood by those who do not specialize in finance. Expanding the pool of policy folks prepared to engage in these debates is a critical step toward improving outcomes” said Judge.

2018 SHORT COURSE AT-A-GLANCE Audience: 48 MPA & MPP students (full capacity) Topics: Accounting principles, financial markets, regulations and policy Financial support: Noah Gottdiener ’78 More info: jrc.princeton.edu/teaching/short-coursefinancial-markets-public-policy-professionals

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Private Equity: David Rubenstein, Co-founder and

Impact Investment: Philip D. Bennett, First Vice President (ret.), EBRD Global Economic and Financial Fault Lines: Ashoka Mody, Princeton University Cryptocurrencies & Financial Market Implications: Amber Baldet, Co-founder & CEO, Clovyr Financial Regulation Panel: Aaron Klein, Brookings Institution, Duncan Jepson, Liberty Global Kathryn Judge, Columbia Law School

TEACHING & LEARNING: FINANCIAL MARKETS FOR PUBLIC POLICY PROFESSIONALS

Students and instructors from the 2018 short course.

“… I was extremely impressed at how well this course reviewed STUDENT FEEDBACK

fundamental concepts, using countless real-world examples and real-

Would recommend this course to others:

time trends. I came away feeling as though I can now read the WSJ

yy Absolutely . . . . . . . . . . . . 53% yy Yes, with enthusiasm . . . . 18% yy Yes . . . . . . . . . . . . . . . . . . 29%

and Financial Times! I especially appreciated the thorough review of

Likely to take similar courses in future?

system in the global economy. I also appreciated the chance to be

yy Likely or very likely . . . . . . 79% yy Unlikely . . . . . . . . . . . . . . 15% yy Very unlikely . . . . . . . . . . . . 6% Quantity/quality of subject matter learned: yy An amazing amount . . . . . 35% yy A lot . . . . . . . . . . . . . . . . . 48% yy Moderate amount . . . . . . 17%

the bond market, the housing crisis, and the role of the U.S. banking

exposed to new ideas and thought leaders during the final day of sessions.”

“Brilliant, added a lot of new knowledge, especially the basic workings of financial markets and some inherent flaws.”

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TEACHING & LEARNING: SELECTED COURSES The Center supports educational programs designed to enhance students’ opportunities to learn about finance, macroeconomics, and public policy. This includes undergraduate and graduate courses, the undergraduate certificate in finance (through the Bendheim Center for Finance), and pre-term short courses.

ECO 361: FINANCIAL ACCOUNTING, Donal Byard.

how does an international financial order evolve? What are

Financial accounting is the accumulation of relevant

the effects of international capital mobility? How is resulting

financial data for a firm, and summarizing and reporting

conflict and instability managed, on both a national and

this information in a firm’s financial statements. This course

international level?

examines the important accounting rules and conventions balance sheet, income statement, and statement of cash

ECO 494: CHINESE FINANCIAL AND MONETARY SYSTEMS, Wei Xiong. With its rapid economic growth in

flows) and related disclosures. While the course provides a

the past three decades, China already has the world’s second

broad overview of the processes and procedures followed in

largest economy. Meanwhile its financial markets are also

producing an enterprise’s financial statements, the course

being quickly liberalized and integrated with the rest of the

emphasizes the analysis of financial statements and related

world. As the current trend continues, there are growing

disclosures by external users such as investors and creditors.

interests to learn and understand the workings of China’s

used to produce a firm’s financial statements (i.e., the

financial and monetary systems. This course aims to serve

ECO 315: TOPICS IN MACROECONOMICS,

this objective with a particular emphasis on understanding

Nobuhiro Kiyotaki. This course uses economic theory to

the role provided by the financial system in facilitating

study credit boom, financial crisis and public policy. The

China’s economic development, in addition to the investment

topics include historical overview of financial crises, credit

opportunities and risk presented by the system to the outside

and asset price booms, banking crisis, balance of payment

world.

crisis, sovereign debt crisis, and monetary, fiscal and macro prudential policies.

ECO 363: CORPORATE FINANCE AND FINANCIAL INSTITUTIONS, David Schoenherr. This

context of the working of financial markets. Topics include

NEW COURSE IN FALL 2018 ECO 406: RADICAL MARKETS (GLEN WEYL)

capital budgeting, capital structure, risk management, and

Wealthy countries in the 21st century face a triple

course examines the determinants of corporate financing decisions and the role of financial institutions in the wider

corporate governance. Additionally, the course introduces various methodologies for valuing individual projects, as well as entire companies.

WWS 466 / HIS 467: FINANCIAL HISTORY,

and failing political legitimacy; many observers blame free markets for these seemingly intractable problems. This course will explore the counterintuitive idea that true free markets might actually

Harold James. The course examines the history of financial

be able to solve these problems by adopting

innovation and its consequences. It examines the evolution

radically new social institutions. These markets would

of trading practices, bills of exchange, government

upend property relations, traditional conceptions

bonds, equities, banking activity, derivatives markets, and

of democracy and international migration. We will

securitization. How do these evolve in particular state or

critically interrogate such unconventional ideas and

national settings, how are the practices regulated, how

explore avenues for applying, disseminating and

do they relate to broader development? What happens as

organizing around them.

financial instruments are traded across state boundaries, and

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social crisis of rising inequality, economic stagnation

TEACHING & LEARNING: SELECTED COURSES

ECO 507: TOPICS IN EMPIRICAL MACROECONOMICS, Atif Mian. This course is geared towards (i) understanding how finance and the macro

WWS 582F: TOPICS IN ECONOMICS – HOUSE OF DEBT: UNDERSTANDING MACRO & FINANCIAL POLICY, Atif Mian. Why do severe recessions happen?

economy interact with each other, and (ii) introducing

Could we have prevented the Great Recession and its

micro-empirical techniques and data sets for answering

consequences? And what actions are needed to prevent

traditional macro questions. The focus of the class is

such crises going forward? We undertake an empirical

empirical but we begin each topic with a discussion of its

exploration of these questions in this course and debate the

theoretical foundation.

various macro and financial policy questions that arise. Our discussions will be strictly disciplined by data and evidence.

ECO 523: PUBLIC FINANCE I, Henrik J. Kleven and

The course will analyze the role of debt in generating the

Owen M. Zidar. This course provides a microeconomic

Great Recession and the Great Depression, as well as the

examination of the role of government in the economy.

current economic malaise in Europe. The course is built

The topics covered include sufficient statistics approaches,

around the book House of Debt by Mian and Amir Sufi.

labor supply responses, taxable income responses, savings/ redistribution. In terms of methodologies, empirical and

WWS 593B: TOPICS IN POLICY ANALYSIS EUROZONE CRISIS AND BEYOND, Ashoka Mody. In

theoretical analyses will feature in roughly equal proportions.

the second half of 2011, the crisis in the eurozone threatened

wealth responses, tax compliance, optimal taxation and

to run out of control. This course discusses four themes: 1)

ECO 526 / FIN 526: CORPORATE FINANCE, David

the critiques of the concept of the eurozone prior to January

Schoenherr and Wei Xiong. Introduction to corporate finance

1999; 2) why the eurozone appeared a major success at its

covering theories and empirical evidence about principal-

10th anniversary, which coincided with the beginning of

agent models of firm managerial structure, takeover bids,

the global economic crisis; 3) the interconnected nature of

capital structure, corporate governance; regulation of

the crisis, weak sovereigns, weak banks, and weak growth

financial markets; financial markets and institutions with a

prospects; and 4) the domestic and multilateral measures to

focus on asymmetric information, transaction costs, or both;

deal with the crisis. The course also considers the future of

dynamic models of market making; and portfolio manager

the eurozone.

performance evaluation.

ECO 553: INTERNATIONAL MONETARY THEORY AND POLICY I, Mark A. Aguiar. This sequence (with

WWS 525: PUBLIC ECONOMICS AND PUBLIC POLICY, Henrik J. Kleven. This course focuses on the role of the government in the economy and aims to provide an

ECO 554) develops core models of international finance

understanding of the reasons for government intervention

and open-economy macroeconomics, and surveys selected

in the economy, analyzing the benefits and costs of possible

current research topics in the field. Topics treated in the

government policies, and the response of economic agents

first semester include: the intertemporal approach to

to the government’s actions. The course covers education,

the current account; the determination of real exchange

labor, and tax policy, social insurance programs, public

rates, and purchasing power parity; international CAPM

goods, environmental protection, and the interaction

and uncovered interest rate parity; sovereign debt crisis;

between different levels of government.

speculative attacks and liquidity crises; international risk sharing and capital flows, home bias, and the stability of the international financial system.

23

CENTER EVENTS: HIGHLIGHTS During the period February 2018–February 2019, the Center hosted and co-hosted over 25 events including conferences, lectures, student and faculty seminars and informal gatherings.

T

he Center’s program of events is designed to complement

again at the invitation of the Center’s Undergraduate

classroom learning, foster innovative research, and

Associates. Clayton discussed the SEC’s evolving views on

engage with policymakers and industry professionals.

At the invitation of the Center’s Undergraduate Associates,

LORETTA J. MESTER *85, PRESIDENT OF THE CLEVELAND FEDERAL RESERVE BANK, gave a speech on March 27, 2018 at Princeton University. In addition to discussing the economic outlook, Mester assessed labor market conditions, the expected path of inflation and the monetary policy agenda.

SECURITIES AND EXCHANGE COMMISSION CHAIRMAN JAY CLAYTON spoke on April 5, 2018,

whether digital coins should be classified as securities and the need for government oversight in the context of rapid technological innovation.

On October 16, 2018 four experts, DAVID A. BALDWIN *65, THAD MCBRIDE ‘95, MEREDITH H. TERRELL ‘91, BRIAN O’TOOLE ‘03, explored the effectiveness of financial sanctions as diplomatic tools and also discussed the “secondary sanctions” that restrict U.S. firms’ interactions with any non-U.S. entities that have conducted business with a sanctioned state.

Students packed the room to hear SEC Chairman Jay Clayton speak about cryptocurrency regulation.

24

CENTER EVENTS: HIGHLIGHTS

CHRISTOPHER MARKS *96, head of emerging markets at Mitsubishi Financial Group, spoke on November 8, 2018 about the changing landscape of development finance. As foreign aid shrinks, firms and governments in emerging markets, as well as development banks, are increasingly seeking out new, private investors. In this context, risk management tools—from balance sheet readjustment, to project cofinancing, and risk guarantees—are critical for attracting and retaining investment.

The Center hosted FEDERAL COMMUNICATIONS

COMMISSIONER JESSICA ROSENWORCEL on December 5, 2018 for a conversation about net neutrality, 5G policy, and finance. Nick Feamster, Professor of Computer Science and Deputy Director of Princeton’s Center for Information Technology Policy moderated the discussion.

The Center sponsored three book talks in Fall 2018, with more planned for Spring 2019: zzE. GLEN WEYL, Visiting Research Scholar at the JulisRabinowitz Center for Public Policy & Finance and a Principal Researcher at Microsoft Research, talked about

Loretta Mester

his new book Radical Markets: Uprooting Capitalism and Democracy for a Just Society, coauthored with Eric Posner.

Anna Stilz, Professor of Politics and Human Values at Princeton University served as discussant. zzASHOKA MODY’s Euro Tragedy: A Drama in Nine Acts is a comprehensive and authoritative history of the euro. Mody, previously the Deputy Director of the IMF’s Research and European Departments, is a faculty affiliate of the Center and Charles & Marie Robertson Professor of International Economics at Princeton. The Economist lists Radical Markets and Euro Tragedy in the best five business and economics books of 2018. zzDoing Capitalism in the Innovation Economy: Reconfiguring the Three-Player Game between Markets, Speculators and the State by WILLIAM H. JANEWAY

‘65 was the third book talk. Janeway is a senior advisor and managing director at Warburg Pincus and has been Christopher Marks

an active venture capital investor for more than 40 years.

25

CENTER EVENTS: CALENDAR

DATE

EVENT

AUDIENCE SPRING 2018

26

Feb. 15

The Future of Manufacturing-Led Development, Otaviano Canuto, Executive Director, World Bank Group (lunch talk)

Princeton University students

Feb. 15

The Rule of Law at Home and Abroad: Not Just for Lawyers and Judges, James Silkenat (co-sponsored with Law and Public Affairs)

Princeton University students

Feb. 20

Macrofinance Lab - Working Dinner

Macrofinance Lab members, faculty, staff and students

Feb. 22-23

The Future of Globalization: Trade, Finance & Politics (7th Annual Conference)

Ticketed event. Open to the public.

Mar. 7

An Accidental Brexit: Destabilization of Europe and Weakening Multilateralism, Paul J.J. Welfens (organized by the Program in Contemporary European Politics and Society)

Princeton University faculty, staff, and students

Mar. 26

The Economic Outlook, Monetary Policy, and Some Future Policy Considerations, Loretta Mester, President of the Cleveland Federal Reserve Bank

Open to the public.

Apr. 2

Latin America: Recent Developments and Economic Outlook, Alejandro Werner, Director-Western Hemisphere, IMF

Princeton University students

Apr. 5

Cryptocurrency and Initial Coin Offerings, Jay Clayton, Securities and Exchange Commission Chairman

Princeton University students

Apr. 17

Macrofinance Lab - Working Dinner

Macrofinance Lab members, faculty, staff and students

May 8

End of year lunch

Center faculty affiliates, staff and undergrad and grad associates

CENTER EVENTS: CALENDAR

DATE

EVENT

AUDIENCE FALL 2018

Sep. 5-8

Financial Markets for Policy Professionals (Ninth Edition)

Registration only for MPPs and MPAs

Sep. 17

Welcome Dinner

Center affiliates and student associates

Sep. 25

Radical Markets (book talk), Glen Weyl and Anna Stilz

Open to the public

Oct. 1

Macrofinance Lab - Working Dinner

Macrofinance Lab members, faculty, staff and students

Oct. 4

Carolyn Wilkens, Bank of Canada

Princeton University faculty, staff, and students

Oct. 9

Euro Tragedy (book talk), Ashoka Mody

Open to the public

Oct. 11

Development Through Digitization, Nadeem Hussain and Shahryar Reza, PlanetN Group

Princeton University faculty, staff, and students

Oct. 16

Sanctions Finance (panel discussion), David A. Baldwin *65, Thad McBride ‘95, Meredith H. Terrell ‘91, Brian O’Toole ‘03

Princeton University faculty, staff, and students

Nov. 8

Successful Risk Management in Development Finance, Christopher Marks, Managing Director and Head of Emerging Markets, MUFG/Mitsubishi Financial Group

Princeton University faculty, staff, and students

Nov. 29

Doing Capitalism in the Innovation Economy, Bill Janeway, Warburg Pincus

Open to the public

Dec. 3

The Many Ways of Doing Economic History, Marc Flandreau, University of Pennsylvania

Princeton University faculty, staff, and students

Dec. 4

Macrofinance Lab - Working Dinner

Macrofinance Lab members, faculty, staff and students

Dec. 5

Net Neutrality, 5G Policy, and Finance, FCC Commissioner Jessica Rosenworcel (moderated by Prof. Nick Feamster)

Princeton University faculty, staff, and students

27

CENTER EVENTS: CALENDAR

DATE

EVENT

AUDIENCE SPRING 2019

Feb. 12

Macrofinance Lab - Working Dinner

Macrofinance Lab members, faculty, staff and students

Radical Mechanisms 10 Years After the Financial Crisis, JRCPPF 8th Annual Conference, Cosponsored by Microsoft Research

Ticketed event. Open to the public.

Feb. 28

Crashed: How a Decade of Financial Crises Changed the World (book talk), Adam Tooze, Columbia University (Economic History Workshop)

Princeton University faculty, staff, and students

Mar. 7

Governor Lael Brainard, US Federal Reserve Board

Open to the public

Mar. 13

Fixing the Euro Needs to Go Beyond Economics, Anne-Laure Delatte, CEPII Sciences Po

Princeton University faculty, staff, and students

Mar. 27

Finance Industry Panel: What’s Changed Since 2008 and What’s Ahead?, Jim Keenan (BlackRock), Scott Graves (Ares Capital)

Open to the public

Mar. 28

Trade, Law and the Global Order of 1919, Patricia Clavin, Oxford University (Economic History Workshop)

Princeton University faculty, staff, and students

Apr. 4

Dan M. Berkovitz, Commissioner of the Commodity Futures Trading Commission

Princeton University faculty, staff, and students

Apr. 4

The Political Economy of Secrecy, Katherine Epstein, Rutgers University (Economic History Workshop)

Princeton University faculty, staff, and students

Apr. 5-6

Princeton Summit on Africa - Panel on Trade and Economic Policies

Ticketed event. Open to the public.

Apr. 9

The Indian Economy, Arvind Panagariya, Columbia University (moderated by Prof. Atul Kohli)

Princeton University faculty, staff, and students

Apr. 11-12

Insights on Health Policy: A Conference in Tribute to Uwe Reinhardt

Apr. 18

Responding to the Challenge of State Fragility, Sir Tim Besley, London School of Economics and Politics

Princeton University faculty, staff, and students

Apr. 23

Macrofinance Lab - Working Dinner

Macrofinance Lab members, faculty, staff and students

Apr. 30

Demian Reidel, (former) Deputy Governor, Central Bank of Argentina

Princeton University faculty, staff, and students

May 8

End of year lunch

Staff, faculty, student associates

Feb. 21-22

28

ABOUT THE CENTER Established in 2011, the Julis-Rabinowitz Center for Public Policy & Finance at the Woodrow Wilson School promotes research and teaching about financial markets and the macroeconomy, with the aim of improving the design and implementation of public policies.

The Center offers opportunities for collaborations among students and faculty in the Woodrow Wilson School, other departments, and the wider policy community. The Center encourages crossing boundaries both within economics and across disciplines such as economics, finance, law, politics, history, and ethics.

OUR SPONSORS Princeton University gratefully acknowledges the generous support of the Center’s sponsors.

THE JULIS-RABINOWITZ FAMILY, for the founding gift that made the Center possible.

PHILIP D. BENNETT, *79 MARK R. GENENDER, ‘87 AND FAMILY NOAH GOTTDIENER, ‘78 DEAN N. MENEGAS, ‘83

ADMINISTRATION Atif Mian Director atif@princeton.edu 609-258-6718

Violeta Rosenthal Center Academic Specialist vrosenth@princeton.edu 609-258-9869

Pallavi Nuka Assistant Director pallavi@princeton.edu 609-258-5258

Nancy Turco Program Coordinator nturco@princeton.edu 609-258-7051

CONTACT US The Julis-Rabinowitz Center for Public Policy & Finance The Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544

Tel: 609-258-7051 Email: jrcenter@princeton.edu Web: jrc.princeton.edu