This is the transcription of the American Finance Association's Presidential Address of January 7, 2017. The address is based on the paper "'https://ssrn.com/abstract=2893930' The Scientific Outlook in Financial Economics"

Given the competition for top journal space, there is an incentive to produce “significant” results. With the combination of unreported tests, lack of adjustment for multiple tests, and direct and indirect p-hacking, many of the results being published will fail to hold up in the future. In...

Home Bias refers to the tendency to invest more heavily in one's domestic equity market than global market-value proportions would suggest. Whether or not home-biased investing makes sense, the fact is that people in pretty much every country do it. This article addresses the question of whether...

From a frequentist perspective, we examine the large sample properties of Bayes procedures in a general framework, where data may be dependent and models may be misspecified and non-smooth. The posterior distribution of parameters is shown to be asymptotically normal, centered at the quasi...

This paper tests for robust multidimensional poverty comparisons across six countries of the West African Economic and Monetary Union (WAEMU). Two dimensions are considered, nutritional status and assets. The estimation of the asset index is based on two factorial analysis methods. The first...

Much of economists’ statistical work centers on testing hypotheses in which parameter values are partitioned between a null hypothesis and an alternative hypothesis in order to distinguish two views about the world. Our traditional procedures are based on the probabilities of a test statistic...

It’s easy to overlook the fact that, in thinking about investment risk, we are implicitly making a choice about the benchmark against which risk is measured. It’s a convention, which we often take for granted, to use our local hard currency as the risk-less benchmark – but this choice,...

This paper compares two methods for undertaking likelihood-based inference in dynamic equilibrium economies: a Sequential Monte Carlo filter proposed by Fernandez-Villaverde and Rubio-Ramirez (2004) and the Kalman filter. The Sequential Monte Carlo filter exploits the nonlinear structure of the...

Bayesian empirical approaches appear frequently in fields such as engineering, computer science, political science and medicine, but almost never in law. This article illustrates how such approaches might be very useful in empirical legal studies. In particular, Bayesian approaches enable a much...

This paper is primarily concerned with extending the results of Stein to spherically symmetric distributions. Specifically, when X ∼f(||X - θ||2), we investigate conditions under which estimators of the form X ag(X) dominate X for loss functions ||δ- θ||2 and loss functions which are...