Faculty Research in the AEA 2022 Meeting

Jan. 24, 2022

The American Economic Association’s 2022 annual meeting included presentations by several faculty affiliates of the Julis-Rabinowitz Center for Public Policy & Finance (JRCPPF).

The meeting was held virtually on Jan 7-9, 2022, in conjunction with 64 academic associations in related disciplines known as the Allied Social Science Associations (ASSA). This is the premier event for economists in the U.S. and globally to share their research and exchange ideas.

JRCPPF director Atif Mian co-authored two papers presented at the meeting. The first, A Goldilocks Theory of Fiscal Deficits (with Amir Sufi at Univ. of Chicago and Ludwig Straub at Harvard) provides a framework for analyzing the economic impacts of government fiscal policy when nominal interest rates approach zero. The second, Inequality and r* (also with Amir Sufi and Ludwig Straub) looks at the relationship between top-income inequality and the wealth to income ratio across 22 advanced economics. The paper finds that growing inequality is explained almost entirely by rising asset valuation as opposed to capital accumulation.

Mark Aguiar presented Micro Risks and Pareto Improving Policies with Low Interest Rates, a paper co-authored with Manuel Amador (FRB-Minneapolis, Uinv. Of Minnesota) and Cristina Arellano (FRB-Minneapolis), which aims to establish the conditions required for fiscal policy to be Pareto improving in an economy where the risk-free interest rate on government bonds is below the growth rate.

Markus Brunnermeier presented two papers: The Fiscal Theory of Price Level with a Bubble, with Sebastian Merkel (Univ. of Exeter) and Yuliy Sannikov (Stanford), modifies the standard fiscal theory of the price level to explain how countries with persistently negative primary surpluses can enjoy both positively valued currency and low inflation. Brunnermeier also presented Debt as a Safe Asset (also with Merkel and Sannikov), which shows how during recessions, the “safe asset” value of government-issued debt (in countries like Japan and the U.S.) increases and consequently increases investors’ appetite for such debt.

Ernest Liu presented a paper, co-authored with Natalie Cox and Daniel Morrison, titled Market Power in Small Business Lending: A Two-Dimensional Bunching Approach which examines whether government-funded guarantees and interest rate caps primarily benefit borrowers or lenders in concentrated markets.

Adrien Matray presented a paper co-authored with Charles Boissel (HEC Paris) titled, Higher Dividend Taxes, No Problem! Evidence from Taxing Entrepreneurs in France in which they examine the impact of higher dividend taxes on investment and firm capital allocation.

Stephen Redding presented a paper, International Friends and Enemies, co-authored with Ernest Liu and Benny Kleinman (Princeton) studying the extent to which nations’ economic relations influence their political behavior in international bodies.

Motohiro Yogo’s paper “Global Life Insurers During a Low-Interest Environment,” presented by co-author Ralph Koijen (Univ. of Chicago), provides new empirical evidence on the fragility of US and European life insurers in relation to minimum return guarantees in a low interest rate environment.