Securing Technological Leadership? The Cost of Export Controls on Firms
Co-authors: Lina Han, Marco Macchiavelli, André Silva, April 2025
R&R Journal of Financial Economics
EFA 2025 · CEPR & Kiel Institute Geonomics Conference 2023 · Bocconi Geonomics Workshop 2024 · GCAP Annual Conference (Columbia) 2024
Paper · Liberty Street · BibTeX
FT · Bloomberg · NYT · CFR · CSIS · McKinsey · Barron’s · Marginal Revolution
Abstract: To safeguard its technological leadership, the U.S. has restricted domestic suppliers from exporting specific cutting-edge technologies to selected Chinese firms. Domestic firms affected by these export controls halt sales to Chinese customers, as intended, but struggle to establish new relations with alternative customers domestically or in politically aligned regions. As a result, domestic suppliers experience a $130 billion decline in market capitalization, along with reductions in profitability, employment, and bank lending. We also show how Chinese firms strategically respond to export controls. Overall, export controls impose significant costs on domestic firms producing the very technologies these policies intend to protect.
Extend-and-Pretend in the U.S. CRE Market
Co-author: Saketh Prazad, October 2024
Paper · BibTeX
FT [1][2][3] · Bloomberg [1][Odd Lots] [Business Week] · CoStar · Reuters
SFS Cavalcade 2025 · NBER Financial Market Risks 2025 · FIRS 2025 · Mitsui Symposium 2025
Abstract: We show that banks “extended-and-pretended” their impaired CRE mortgages in the post-pandemic period to avoid writing off their capital, leading to credit misallocation and a buildup of financial fragility. We detect this behavior using loan-level supervisory data on maturity extensions, bank assessment of credit risk, and realized defaults for loans to property owners and REITs. Extend-and-pretend crowds out new credit provision, leading to a 4.8–5.3% drop in CRE mortgage origination since 2022:Q1 and fuels the amount of CRE mortgages maturing in the near term. As of 2023:Q4, this “maturity wall” represents 27% of bank capital.
Losses from Natural Disasters: County-Level Data on Damages, Injuries, and Fatalities
Co-author: Martin Hiti, July 2025
Paper · BibTeX · Liberty Street
Project website: newyorkfed.org/research/policy/natural-disaster-losses
Abstract: We introduce the first comprehensive publicly available dataset on county-level damages, injuries, and fatalities from natural disasters in the U.S. and present a few facts on the economic and human costs of extreme climate events. Our source is the National Oceanic and Atmospheric Administration’s Storm Events Database, which reports losses for geographic areas largely defined based on meteorological science. We map these areas to counties using geographic tools together with the spatial distribution of population, housing stock, and economic activity. Our estimates are particularly accurate for severe disasters. The Losses from Natural Disasters dataset is regularly updated at https://newyorkfed.org/research/policy/natural-disaster-losses.
Stakeholders’ Aversion to Inequality and Bank Lending to Minorities
Co-author: Hanh Le, November 2023
AFA 2025 · 2024 Santiago Finance Workshop · 2024 UNC Solutions for Reducing Wealth Inequality
Paper · BibTeX · Liberty Street
Abstract: We find that banks differ in their propensity to lend to minorities based on their stakeholders’ aversion to inequality. Using mortgage application data collected under the Home Mortgage Disclosure Act, we document a large and persistent cross-sectional variation in banks’ propensity to lend to minorities. Inequality-averse banks have a higher propensity to lend to borrowers in high-minority areas and, within census tracts, to non-white borrowers compared to other banks. This higher propensity (i) is not explained by selection of applicants, (ii) allows these banks to retain and attract their inequality-averse stakeholders, and (iii) does not predict worse ex-post loan performance.
How do supply shocks to inflation generalize? Evidence from the pandemic era in Europe
Co-authors: Viral Acharya, Tim Eisert, Christian Eufinger, April 2025
AFA 2026 · EFA 2024 · WFA 2024 · 2024 Yale Supply Chain Workshop · 2023 CEPR Paris Symposium
Paper · BibTeX · FT · VoxEU
Abstract: We document how the interaction of supply chain pressures, elevated household inflation expectations, and firm pricing power contributed to the pandemic-era surge in consumer price inflation in the euro area. Initially, supply chain disruptions raised inflation, particularly in manufacturing sectors through a cost-push channel, while also elevating inflation expectations. In turn, higher inflation expectations appear to have lowered the price elasticity of consumer demand and strengthened firms’ pricing power, enabling even firms in service sectors, that were initially unaffected by supply constraints, to raise markups. Through this mechanism, localized inflation in sectors sensitive to supply-side shocks generalized into broad-based inflation.
Understanding the Pricing of Carbon Emissions: New Evidence from the Stock Market
Co-authors: Emilio Osambela, Matthew Pritsker, June 2025
EFA 2025 · NBER SI EFEL 2025
Paper · BibTeX
Abstract: Are carbon emissions priced in equity markets? The literature is split with different approaches yielding conflicting results. We develop a stylized model showing that, if emissions are priced, stock returns depend on expected emissions and the product of the innovation in emissions and the price-dividend ratio. Building on this insight, we derive and test new predictions. We find that emissions are priced in equity markets, but the magnitude of such pricing is highly sensitive to the inclusion of a few “super emitters” (mostly operating in electric power generation). Our theoretical insight also helps reconcile seemingly divergent results in the literature.
Navigating Geopolitical Risk: Evidence from U.S. Mutual Funds
Co-authors: Lina Han, Marco Macchiavelli, April 2025
2025 Kroner Center for Financial Research Research Grant
Paper
Abstract: We study how geopolitical shocks affect the U.S. asset management industry, focusing on domestic equity mutual funds. As the U.S. government imposes export controls on some U.S. firms selling restricted technology to China, mutual funds exposed to such U.S. firms experience lower returns and higher volatility. Active funds mitigate the effect of geopolitical shocks relative to passive funds. Specifically, active funds sell stocks of U.S. firms exporting to China, which we call portfolio decoupling. Active funds exposed to the shock also buy lottery stocks and stocks with higher loadings on priced risk factors, likely to mitigate the drop in performance.