This paper examines how much capital banks should optimally hold. Our model encompasses different kinds of moral hazard studied in banking: asset substitution (or risk shifting, e.g., making risky, negative net present value loans), managerial rent seeking (e.g., shirking or investing in...

This paper examines the effects of constraints in a Tiebout framework applied to school finance reforms. We use data from Michigan, which enacted a comprehensive school finance reform in 1994 that, in effect, ended local discretion over school spending. This scenario affords us a unique...

Most mortgages in the United States are securitized through the agency mortgage-backed-securities (MBS) market. These securities are generally traded on a “to-be-announced,” or TBA, basis. This trading convention significantly improves agency MBS liquidity, leading to lower borrowing costs...

Charter schools have been one of the most important dimensions of recent school reform measures in the United States. Currently, there are more than 4,500 charter schools spread across forty U.S. states and the District of Columbia. Though there have been numerous studies on the effects of...

This study identifies clusters of U.S. and Canadian metropolitan areas with similar knowledge traits. These groups—ranging from Making Regions, characterized by knowledge about manufacturing, to Thinking Regions, noted for knowledge about the arts, humanities, information technology, and...

In the conduct of monetary policy, there exists a risk-return trade-off between financial conditions and financial stability, which complements monetary policy’s traditional trade-off between inflation and real activity. The trade-off exists even if monetary policy does not target financial...

We reassess the predictability of U.S. recessions at horizons from three months to two years ahead for a large number of previously proposed leading-indicator variables. We employ an efficient probit estimator for partially missing data and assess relative model performance based on the receiver...

Remarks at the Central Bank of the United Arab Emirates, Abu Dhabi, United Arab Emirates.

We describe and evaluate the measures taken by the U.S. government to rescue Fannie Mae and Freddie Mac in September 2008. We begin by outlining the business model of these two firms and their role in the U.S. housing finance system. Our focus then turns to the sources of financial distress that...

We document three new facts about gender differences in executive compensation. First, female executives receive a lower share of incentive pay in total compensation relative to males. This difference accounts for 93 percent of the gender gap in total pay. Second, the compensation of female...