Standard models of asset pricing assume that risky (safe) financial assets have higher returns because they have higher (lower) exposures to systematic risk factors. They also typically assume that these exposures to risk and the degree of co-movement across assets are the same in good times and bad times. Yet, there is ample evidence that […]
Trade and industrial policies designed to support domestic industries can unintentionally kindle technological progress abroad. This column examines the case of rare earth elements – a group of metals essential to producing batteries, lasers, and other high-tech components. These elements are not only critical to manufacturing at the knowledge frontier; they also have a low […]
The growing footprint of nonbank financial institutions in corporate credit markets raises important – but often overlooked – questions about how monetary and macroprudential policies shape credit allocation to the real economy. Using global syndicated loan data, this column shows that nonbanks act as shock absorbers, shielding nonfinancial firms from tightening in both monetary and […]
In 2025, the US government announced a series of tariff increases targeting major trading partners, including Canada, China, and Mexico. This column estimates the economic consequences of these proposed tariffs to the US and globally. According to this model, real wages in the US decline by 1.4% in 2028 and GDP falls by approximately 1%, […]
