Research
Job Market Paper (JMP)
1. The Impact of Fiscal Policy on Financial Institutions, Asset Prices, and Household Behavior (2024)
Abstract:
Tax incentives on financial activities have a major impact on the U.S. government budget and currently amount to $1 trillion in foregone tax revenue per year. Motivated by this fact, this paper uses a novel empirical framework to study the role of fiscal policy as a driver of capital flows in financial markets, the cost and supply of financial products, and asset prices. Using fiscal reforms that shifted household demand for financial products, I document a large and persistent response of capital flows to tax incentives, accounting for up to 53% of the long-term growth of aggregate financial sectors. These shifts in capital allocation have persistent effects on the cross-section of asset prices, with securities that are held relatively more by subsidized institutions outperforming by 13 percentage points in the three years post-reform. The tax savings introduced by fiscal reforms, however, do not entirely accrue to households, as financial institutions retain up to 21% of these savings by increasing the cost of their products when market entry is limited. Given the large response of capital flows to tax incentives, I then investigate whether this response differs across individual U.S. households. I find that fiscal policy carries substantial distributional effects, which tend to benefit wealthier households. Having access to sophisticated advisors, ultra-high-net-worth households are significantly more responsive to tax incentives and earn a tax alpha of 50 bps annually relative to less-wealthy households. Overall, these findings highlight the importance of fiscal policy in shaping financial markets, with wealthier households benefiting from tax incentives more than less-wealthy households.
‣ Presentations: WFA 2025 (scheduled), SFS Cavalcade 2025 (scheduled), 2024 IMIM, 20th Annual Finance Conference Washington University in St. Louis (poster session)
Working Papers
2. Monetary Policy, Segmentation, and the Term Structure, with Rohan Kekre and Moritz Lenel (2024)
Revise and Resubmit, American Economic Review
Paper | Code to solve the model
‣ Presentations: FIRS 2024, ASSA 2023, NBER SI Macro Money and Financial Frictions 2022, CICM 2022, EWMES 2022, MFA 2022, SED 2022, Boston College, Berkeley, Booth, BSE, Bundesbank, Chicago FED, Columbia, Cowles Foundation, Duke Fuqua, ECB, FED Board, LSE, University of Minnesota, MIT Sloan, NYU, Princeton, Rutgers, Stanford
3. Asset Demand of U.S. Households, with Xavier Gabaix, Ralph Koijen, Sangmin Oh, and Motohiro Yogo (2023)
Paper
‣ Presentations: NBER SI Household Finance 2024, Wharton Junior Conference on Valuations, AFA 2024, NBER Asset Pricing 2022, NBER Innovative Data in Household Finance 2022, SED 2022, SFS Cavalcade 2023, WFA 2023, EFA 2023, UC Boulder Leeds, UW-Madison Business School, NY Fed, Tilburg, U of Amsterdam, UIC, Columbia GSB, Stanford GSB
4. Market Power, Fund Proliferation, and Asset Prices, with Marco Loseto (2024)
Paper
‣ Presentations: MFA 2025, AFA 2025, EGSC Washington University St. Louis 2022
‣ Awards: Yiran Fan Memorial Fellowship for best third year paper
5. A Demand-Based Approach to Short-Selling (2024)
Paper
‣ Presentations: MFA 2024, Yiran Fan Memorial Conference 2024
6. Limited Risk Transfer Between Investors: A New Benchmark for Macro-Finance Models, with Xavier Gabaix, Ralph Koijen, Sangmin Oh, and Motohiro Yogo (2024)
In Progress
7. Democratizing Private Markets: Private Equity Performance of Individual Investors, with Cynthia Balloch, Sangmin Oh, and Petra Vokata (2024)