Economics Of Discrimination

Strategic Asset Allocation: Portfolio Choice for Long‐Term Investors.

We show that stock prices are more accurate when short sellers are more active. First, in a large panel of NYSE-listed stocks, intraday informational efficiency of prices improves with greater shorting flow. Second, at monthly and annual horizons, more shorting flow accelerates the incorporation of public information into prices. Third, greater shorting flow reduces post-earnings announcement drift for negative earnings surprises. Fourth, short sellers change their trading around extreme return events in a way that aids price discovery and reduces divergence from fundamental values. These results are robust to various econometric specifications and their magnitude is economically meaningful.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2067234_code364417.pdf?abstractid=972620&rulid=251500&mirid=2

Short Selling and the Price Discovery Process

The House of Debt captures an interesting theme that links the financial crisis of 2008 with the household debt and particularly the mortgage debt. This work constitutes a detailed analysis of the latest financial crisis and provides all the necessary tools in order for us to be prepared in future similar cases. The book explores how a sharp increase in household debt and the subsequent reduction in consumption led to the Great Recession and Great Depression, as well as the current economic problems in Europe. Professors Mian and Sufi focus on the problems created by macroeconomic effects of private debt beyond the absolute trust on the established economic belief that the banking sector's downfall caused the recession. They employ a comprehensive analysis of the data throughout the crisis period and before in order to learn from the past and prevent same situations from happening again. Therefore, through a detailed analysis that is based on empirical data Mian and Sufi argue about the implemented policy choices. The work is divided into three main parts that include the general description of the recession, the debt and bubbles and the proposed approach to prevent it from happening again. The first part illustrates the consequences of the economic recession, such as job losses, collapse in consumption and wealth inequality. The fundamental idea is the understanding of debt's role in the financial system. Severe economic declines seem to be almost always preceded by an up rise in household debt. By using a collection of facts from the recent economic history Mian and Sufi uncover the mechanism that leads to these economic contractions.

House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again

Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals' migration, we find rent control limits renters' mobility by 20 percent and lowers displacement from San Francisco. Landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law.

/pdf/the-effects-of-rent-control-expansion-on-tenants-landlords-1a80akh7b9.pdf

The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco

https://www.federalreserve.gov/econresdata/feds/2016/files/2016025pap.pdf

The impact of unconventional monetary policy on firm financing constraints: Evidence from the maturity extension program.

Concentration of control rights in leveraged loan syndicates

We find that corporate loan contracts frequently concentrate control rights with a subset of lenders. Despite the rise in term loans without financial covenants--so-called covenant-lite loans--borrowing firms' revolving lines of credit almost always retain traditional financial covenants. This split structure gives revolving lenders the exclusive right and ability to monitor and to renegotiate the financial covenants, and we confirm that loans with split control rights are still subject to the discipline of financial covenants. We provide evidence that split control rights are designed to mitigate bargaining frictions that have arisen with the entry of nonbank lenders and became apparent during the financial crisis.

/pdf/concentration-of-control-rights-in-leveraged-loan-syndicates-2adwclpun7.pdf

Concentration of Control Rights in Leveraged Loan Syndicates

https://www.tau.ac.il/~itaysap/mobility_mar2013.pdf

The (un)importance of geographical mobility in the Great Recession

Did QE lower yields and stimulate the economy? What about risks? Weighing the evidence requires a bit of theory.

/pdf/did-quantitative-easing-work-2ui5qh06o1.pdf

Edison Yu

Papers

The impact of unconventional monetary policy on firm financing constraints: Evidence from the maturity extension program.

Concentration of control rights in leveraged loan syndicates

Concentration of Control Rights in Leveraged Loan Syndicates

The (un)importance of geographical mobility in the Great Recession

Did quantitative easing work