Working papers
Inequality and the Rise of Finance
[Draft]
Abstract: This paper studies the causes behind the rise of the financial sector observed in the United States from the 1980s. The increase in inequality happening over the same period of time is linked to a higher amount of assets to intermediate. Investors need to allocate such funds under public safe assets shortage, which crowds in financial intermediaries to produce private safe assets. As such, the rise of finance is seen as intertwined with the rise of other non-bank financial intermediaries. A heterogeneous agents macrofinance model is able to endogenously predict additional phenomena such as: a decline of the real interest rate, an increase in households indebtedness and leverage, and a feedback effect from finance to inequality through asset valuations. Empirical analyses confirm the theoretical predictions of the model. The set-up also allows for a host of policy experiments like macroprudential policies to analyze different counterfactual scenarios.
— Special Commendation Award (French Finance Association, Gallais-Hamonno Research Prize 2025);
— Gregory Chow Rising Star award (CES 2024);
— Macro Finance Society PhD student award 2024;
— Best Macroeconomics paper (SOCAE 2023).
The political economy of banking competition
[Draft]
Abstract: This paper provides a banking competition rationale for the financial deregulation waves that happened in the United States from the 1980s onward. I claim that institutions that could take advantage of technological and regulatory advantages (shadow banks) gained market power with respect to traditional banks. In light of this element, the paper sees the waves of financial deregulation as the by-product of higher asymmetric competition in the banking system, which led traditional banks to lobby harder in order to level the playing field. As such, the paper is able to produce a root cause explanation for the financial deregulation process and its timing. I build a model to illustrate these dynamics, and run some preliminary empirical analyses. The model allows also for financial innovations to be pursued as a temporary and alternative mechanism to cope with failed lobbying attempts. The paper highlights the daunting task of providing macro-prudential policies and financial market regulation in a political economy environment in which lobbying against regulation itself and regulatory arbitrage are possible.
The Political Economy of Liquidity Triangulation, with O’Connell, Pistor, Thiemann.
R&R at the Journal of Financial Regulation
We propose a heuristic device of liquidity triangulation to understand the creation and management of liquidity in financial systems. We argue that liquidity in credit markets occurs through the interaction of three functions: sovereign debt management, public liquidity provision, and private liquidity provision. These functions have historically been carried out by different actors through different institutional arrangements. These arrangements in turn create endogenous pressure for change through both their effects on financial stability and their distributional implications, which may give rise to political struggle. Further, the international context conditions the interaction of the agents which exercise our functions, while regulation shapes the perimeter of the triangulated space. We then apply this framework to three case studies: the creation of the Bank of England in the 18th and 19th Centuries, the transition in the United States from free-banking in the mid-1800s to the establishment of the Federal Reserve system in 1913, and the European sovereign debt crisis which began in 2008. In drawing from disciplines across the social sciences, we aim to create a general framework for understanding the political economy of liquidity which may be used to understand the development and effects of liquidity regimes both historically and comparatively.
Publications
Peer reviewed
Accounting for the Duality of the Italian Economy (with J. Fernàndez-Villaverde, L. E. Ohanian, V. Quadrini)
Review of Economic Dynamics (2023), 50, 267-290.
Abstract: After 162 years of political unification, Italy still displays large regional economic differences. In 2019, the per capita GDP of Lombardia was 39,700 euros, but Calabria’s per capita GDP was only 17,300 euros. We build a two-region, two-sector model of the Italian economy to measure the wedges that could account for the differences in aggregate variables between the North and the South. We find that the largest driver of the regional disparity in per capita output is the difference in total factor productivity, followed by fiscal redistribution. These two factors, together, account for more than 70 percent of the output disparity between the North and the South.
NBER Working Paper No. 31299 [Link] | CESifo Working Paper No. 10470 [Link]
[Paper] [Replication material]
Identifying the Effects of Sanctions on the Iranian Economy Using Newspaper Coverage (with M.H. Pesaran)
Journal of Applied Econometrics (2023), 38(3), 271-294 (Lead article).
Abstract: This paper focuses on the identification and quantitative estimation of sanctions on the Iranian economy over the period 1989–2019. It provides a new time series approach and proposes a novel measure of sanctions intensity based on daily newspaper coverage. In absence of sanctions, Iran’s average annual growth could have been around 4-5 per cent, as compared to the 3 per cent realized. Estimates of the proposed sanctions-augmented structural VAR show that sanctions significantly decrease oil export revenues, result in substantial depreciation of Iranian rial, followed by subsequent increases in inflation and falls in output growth. Keeping other shocks fixed, two years of sanctions can explain up to 60 per cent of output growth forecast error variance, although a single quarter sanction shock proves to have quantitatively small effects.
[Paper+Supplements] [Data and replication material]
Previous WP version: CESifo Working Papers 9217/2021 [Link] [Data and Codes]
Book chapters
The international payment system, euromarkets, and central bank swap lines, with O. Benedek, in Poniachek, H. (Ed.) (forthcoming) International Corporate Finance, World Scientific Publishing.
[Ungated copy]
Financial and Monetary Instruments (with L. Doria, and L. Fantacci) [multiple chapters]
in “Co-Economy. An analysis of a socio-economic emergent framework” (2019) Lampugnani D. (ed.), Milano: Fondazione Feltrinelli (in Italian)
Other publications
Evidence and Policy Implications of Sanctions in the Long Run: The Case of Iran
CESifo EconPol Forum (2023), 24(3), 27-30
Accounting for the Duality of the Italian Economy (with J. Fernàndez-Villaverde, L. E. Ohanian, V. Quadrini)
VoxEU
Work in Progress
The shadow money multiplier: Liquidity and maturity transformation in the shadow banking system
Assessing the banking competition channel of financial deregulation
The multidimensional effects of sanctions on inequality, with Loni.
From health contagion to currency contagion: The heterogeneous effects of COVID-19 on FX markets
Discussions
Tian, Xie, Yu (2025) — The Accessibility of SEC Filings and Media Information Production [Slides]
Fahlenbrach, Ko, Stulz (2025) — Politics, regulation, and bank payouts [Slides]
Meehl (2025) — Bailouts, Bail-ins, and Banking Industry Dynamics [Slides]
Rasnačs (2025) — Business integrity in financial sector companies. A comparative study across political systems [Slides]
Tuma et al. (2025) — Deposit Insurance Reforms and Bank Risk-Taking: An International Perspective on Discipline and Moral Hazard. [Slides]
Castellanos et al. (2024) — The aggregate and distributional implications of credit shocks on housing and rental markets [Slides]
Xu et al. (2024) — Does multiple collective attention for companies improve stock market pricing efficiency? [Slides]
Adrangi et al. (2023) — Equity Market Volatility, Regime Dependence and Economic Uncertainty [Slides]