Papers
Sustainable finance under regulation
Uploaded: Jul 22, 2023
We build a model analyzing optimal environmental regulation in the presence of socially responsible investors. Investors care about sustainability of their portfolios but cannot fully resolve the pollution externality. Regulations, such as pollution tax and subsidies to clean firms, reduce...
Estimating Demand Systems for Treasuries
Uploaded: Jul 18, 2023
Leveraging an institutional feature that Treasury auctions of different maturities are often held simultaneously, we propose a method for estimating demand systems for Treasuries, avoiding the usual endogeneity issues in demand estimation. We implement our method using bidding data from...
Intermediary Capital Constraints and Market Power
Uploaded: Jul 18, 2023
We examine how intermediary capitalization affects asset prices in a framework that allows for intermediary market power. We introduce a model in which capital constrained intermediaries buy or trade an asset in an imperfectly competitive market, and show that weaker...
Centralizing Over-The-Counter Markets?
Uploaded: Jul 18, 2023
In traditional over-the-counter markets, investors trade bilaterally through intermediaries. We assess whether and how to shift trades on a centralized platform with trade-level data on the Canadian government bond market. We document that intermediaries charge a markup when trading with ...
Short-term debt overhang
Uploaded: Jul 11, 2023
We show that short-term debt in a firm’s optimal capital structure reduces investment under asymmetric information. Investors’ interpretation of underinvestment as a positive signal about the quality of the assets in place allows the equity holders to profit from short-term...
Optimal Information and Security Design
Uploaded: Jul 11, 2023
An asset owner designs an asset-backed security and a signal about its value. After privately observing the signal, he sells the security to a monopolistic liquidity supplier. Any optimal signal distribution guarantees the security sale and reveals noisy information about...