Found 38 article(s) for author 'Andrei Shleifer'

Neglected Risks: The Psychology of Financial Crises

Neglected Risks: The Psychology of Financial Crises, Andrei Shleifer, December 2014, Paper, Financial crises are supposed to be rare events, yet they occur quite often. According to Reinhart and Rogoff (2009), investors suffer from “this time is different” syndrome, failing to see crises coming because they do not recognize similarities among the different pre-crisis bubbles. As a result, each crisis surprises investors. Economists typically model financial crises as responses to shocks to which investors attach a low probability ex ante, but which nonetheless materialize. Such shocks (sometimes referred to as “MIT shocks”; e.g., Caballero and Simsek 2013) are consistent with rational expectations in that investors recognize that there is a small chance that the shock might occur, but they are harder to reconcile with the Reinhart Rogoff observation that crises are not that unusual. Link

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Duisenberg school of finance Public Debate: The Financial Crisis and the Future of Capitalism

Duisenberg school of finance Public Debate: The Financial Crisis and the Future of Capitalism. Andrei Shleifer, August 12, 2014, Video. “At an in-depth public debate, organised by Duisenberg school of finance (Feb 2009), Andrei Shleifer of Harvard University discusses the causes of the financial crisis and consequences with regards to future regulation and to capitalism…” Link Verified October 19, 2014

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Banks as Patient Fixed Income Investors

Banks as Patient Fixed Income Investors. Samuel G. Hanson, Andrei Shleifer, Jeremy Stein, August 2014, Paper. “We examine the business model of traditional commercial banks in the context of their coexistence wit shadow banks. While both types of intermediaries create safe “money-like” claims, they go about this in very different ways. Traditional banks create safe claims with a combination of costly equity capital and fixed income assets that allows their depositors to remain “sleepy”: They do not have to pay attention to transient fluctuations in the mark-to-market value of bank assets. In contrast…” Link Verified October 18, 2014

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Growth in Regions

Growth in Regions. Andrei Shleifer, July 15, 2014, Paper. “We use a newly assembled sample of 1,528 regions from 83 countries to compare the speed of per capita income convergence within and across countries. Regional growth is shaped by similar factors as national growth, such as geography and human capital. Regional convergence rate is about 2% per year, comparable to that between countries. Regional convergence is faster in richer countries, and countries with better capital markets…” Link Verified October 18, 2014

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Informality and Development

Informality and Development. Andrei Shleifer, Summer 2014, Paper. “In developing countries, informal firms account for up to half of economic activity. They provide livelihood for billions of people. Yet their role in economic development remains controversial. Some, like Hernando De Soto (1989, 2000), see informal firms as an untapped reservoir of entrepreneurial energy, held back by government regulations. In this view, unleashing this energy by reducing entry regulations or improving property rights would fuel growth and development…” May require purchase or user account. Link Verified October 18, 2014

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Competition for Attention

Competition for Attention. Andrei Shleifer, June 2014, Paper. “We present a model of market competition and product differentiation in which consumers’ attention is drawn to the products’ most salient attributes. Firms compete for consumer attention via their choices of quality and price. Strategic positioning of a product affects how all other products are perceived. With this attention externality, depending on the cost of producing quality some markets exhibit “commoditized” price salient equilibria, while others exhibit “de-commoditized” quality salient equilibria..” Link

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X-CAPM: An Extrapolative Capital Asset Pricing Model

X-CAPM: An Extrapolative Capital Asset Pricing Model. Robin Greenwood, Andrei Shleifer, March 26, 2014, Paper. “Survey evidence suggests that many investors form beliefs about future stock market returns by extrapolating past returns. Such beliefs are hard to reconcile with existing models of the aggregate stock market. We study a consumption-based asset pricing model in which some investors form beliefs about future price changes in the stock market by extrapolating past price changes, while other investors hold fully rational beliefs…” Link verified August 21, 2014

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X-CAPM: An Extrapolative Capital Asset Pricing Model

X-CAPM: An Extrapolative Capital Asset Pricing Model. Robin Greenwood, Andrei Shleifer, March 26, 2014, Paper. “Survey evidence suggests that many investors form beliefs about future stock market returns by extrapolating past returns. Such beliefs are hard to reconcile with existing models of the aggregate stock market. We study a consumption-based asset pricing model in which some investors form beliefs about future price changes in the stock market by extrapolating past price changes, while other investors hold fully rational beliefs. We find that the model captures many features of actual prices and returns…” May require purchase or user account. Link Verified October 18, 2014

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Finance and the Preservation of Wealth

Finance and the Preservation of Wealth. Andrei Shleifer, February 2014, Paper. “We introduce the model of asset management developed in Gennaioli, Shleifer, and Vishny (GSV, 2014) into a Solow-style neoclassical growth model with diminishing returns to capital. Savers rely on trusted intermediaries to manage their wealth (claims on capital stock), who can charge fees above costs to trusting investors. In this model, the ratio of financial income to GDP increases with the ratio of aggregate wealth to GDP. Both rise along the convergence path to steady state growth. We examine several further…” Link Verified October 18, 2014

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Expectations of Returns and Expected Returns

Expectations of Returns and Expected Returns. Robin Greenwood, Andrei Shleifer, January 11, 2014, Paper. “We analyze time series of investor expectations of future stock market returns from six data sources between 1963 and 2011. The six measures of expectations are highly positively correlated with each other, as well as with past stock returns and with the level of the stock market. However, investor expectations are strongly negatively correlated with model-based expected returns. The evidence is not consistent with rational expectations representative investor models of returns…” Link Verified October 18, 2014

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