Pre-production Papers
The following papers, listed alphabetically by the first author's last name, have been accepted for publication in JEEA, and can be downloaded in in the EEA membership log in area.
Consumer Credit with Over-Optimistic Borrowers
Do cognitive biases call for regulation to limit the use of credit? We incorporate over-optimistic and rational borrowers into an incomplete markets model with consumer bankruptcy. Over-optimists face worse income risk but incorrectly believe they are rational. Thus, both types behave identically. Lenders price loans forming beliefs—type scores—about borrower types.
Does Inequality Affect the Needs of the Poor?
We investigate how inequality affects what is considered most necessary to purchase. Combining detailed consumption surveys in India with an instrumental variable approach, we first provide evidence that inequality is associated with a decrease in calorie consumption for poor households. This effect is driven by upward comparisons and associated with poor households spending more on luxuries, consistent with relative deprivation theory.
Information Nudges, Subsidies, and Crowding Out of Attention: Field Evidence from Energy Efficiency Investments
How can information substitute or complement financial incentives such as Pigouvian subsidies? We answer this question in a large-scale field experiment that cross-randomizes energy efficiency subsidies with information about the financial savings of LED lighting. Information has two effects: It shifts and rotates demand curves. The direction of the shift is ambiguous and highly dependent on the information design.
Risk Gravity
We consider the canonical trade model with heterogeneous firms, love for variety and trade costs, and integrate it in the consumption CAPM model. This yields a structural gravity equation that includes an additional factor related to risk premia. Empirical evidence based on firm-level data confirms the importance of cross-sectional heterogeneity in risk and time-varying risk premia to shape bilateral trade flows.
The Effect of Asset Encumbrance on Bank Behavior: Evidence from the Introduction of Covered Bonds in Norway
We use the introduction of covered bonds in Norway in 2007 together with administrative and supervisory data at the bank and loan level to investigate the effect of asset encumbrance, i.e. pledging assets as collateral, on the composition of bank balance sheets and bank risk.
The Uncharted Waters of International Trade
The field of international trade has undergone significant theoretical and empirical advancements over the last twenty-five years. A key breakthrough has been the emergence of firm-level approaches to studying exporting, importing, and global value chains. The field has also experienced a quantitative revolution, driven by medium-scale models that rapidly assess the implications of trade cost shocks on real income.
The Value and Profits of Firms
The real growth of the stock market value of firms has increased from close to 0% on average per year between 1958 and 1980, to 5.2% between 1980 and today. This change coincides with the rise of market power and profits, starting in 1980. This paper proposes to decompose the value of firms based on profits (earnings) rather than dividends.