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New research on economics from Harvard Business School faculty on issues including economic theory, economic slowdown and stagnation, economic growth, and economic sectors.
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Financial Meltdowns Are More Predictable Than We Thought

by Danielle Kost

Robin Greenwood and Samuel G. Hanson discuss new research that shows economic crises follow predictable patterns. Open for comment; Comment(s) posted.

Capitalism Works Better When I Can See What You're Doing

by Sean Silverthorne

Lower prices. More innovation. Better government. Transparency fuels the basic principles of competitive business and open government. Well, most of the time. Open for comment; Comment(s) posted.

Transaction Cost Economics in the Digital Economy: A Research Agenda

by Frank Nagle, Robert Seamans, and Steve Tadelis

The increasing dominance of the digital economy has brought new questions about the interplay of organizations and the market-based ecosystem. Transaction Cost Economics theory is a useful lens to understand firm organization and possibly guide policy and regulation.

How Countries Use Financial Policy to Fight COVID-19

by Rachel Layne

Developing countries have fewer fiscal tools and policy options to combat COVID-19 damage to their economies, according to research by Alberto Cavallo and colleagues. Open for comment; Comment(s) posted.

Sticky Capital Controls

by Miguel Acosta-Henao, Laura Alfaro, and Andrés Fernández

One of the legacies of the 2007–2008 global financial crisis has been a reassessment of the potential for restriction of capital flows policies. This paper documents a set of stylized facts on capital controls along their intensive and extensive margins for emerging markets and document them to be “sticky.” We then rationalize them through a model that includes fixed cost of implementing such policies, which lower the welfare gains of implementation.

Making Economics More Useful: How Technological Eclecticism Could Help

by Amar Bhidé

This paper shows how tools, such as simulations used to design new technologies, can facilitate collaborative economic policy judgments. The paper forms part of a broader, ongoing study of knowledge in practical fields such as engineering, medicine, and business.

How Should US Bank Regulators Respond to the COVID-19 Crisis?

by Michael Blank, Samuel G. Hanson, Jeremy C. Stein, and Adi Sunderam

Instead of the "watchful waiting" approach taken by US bank regulators to the pandemic crisis, they should use their prudential authorities to encourage banks to increase their equity capital. This is effectively a way of buying low-cost insurance against adverse scenarios that have become more likely.

Predictable Financial Crises

by Robin Greenwood, Samuel G. Hanson, Andrei Shleifer, and Jakob Ahm Sørensen

One central issue in the study of macroeconomic stability is financial crisis predictability. This paper estimates the probability of financial crises as a function of past credit and asset price growth.

Inflation with COVID Consumption Baskets

by Alberto Cavallo

Examining the impact that changes in expenditure patterns are having on the measurement of consumer price indices (CPI) inflation in 17 countries, this study finds that the cost of living for the average consumer is higher than estimated by the official CPI. This implies that real consumption is falling more quickly over time.

The Rise of the Investor State: State Capital in the Chinese Economy

by Hao Chen and Meg Rithmire

Researchers document and explain the rise of a novel form of intervention on the part of the Chinese state: the expansion of state capital beyond ownership of state firms.

Financial Distancing: How Venture Capital Follows the Economy Down and Curtails Innovation

by Sabrina T. Howell, Josh Lerner, Ramana Nanda, and Richard Townsend

Common wisdom holds that VC investment and VC-backed startups are relatively insulated from downturns. This study shows that the relative quantity and quality of innovation declines more for VC-backed firms than for other types of firms during downturns.

China Tariffs and Coronavirus a Double Hit to American Retailers

by Michael Blanding

American retailers have yet to pass along higher prices caused by Chinese tariffs, but shrinking product demand caused by the coronavirus could change that, warns Alberto Cavallo. Open for comment; Comment(s) posted.

This Crisis Loan Program Preserved Jobs—and Made Money

by Rachel Layne

Following the 2008 financial crisis, France offered a business loan program that helped firms, employees, and even the government, says Boris Vallee. Open for comment; Comment(s) posted.

Has COVID-19 Broken the Global Value Chain?

by Sean Silverthorne

4Questions Companies and consumers depend on the global value chain to create and distribute products around the world. What happens when the chain breaks? Insights from Laura Alfaro and Ester Faia. Open for comment; Comment(s) posted.

Contractual Restrictions and Debt Traps

by Ernest Liu and Benjamin N. Roth

Microfinance has failed to catalyze entrepreneurship in developing countries, despite abundant evidence of high return on investment opportunities. What can account for this? This study presents a theory in which firms that borrow from an informal lender may see their growth stalled and remain in the relationship indefinitely, even though they would have continued to grow in the absence of a lender.

Is There a Winner in Huawei’s Digital Cold War with the US?

Re: William C. Kirby

Bill Kirby discusses his case study of China-based Huawei’s growth and ultimate confrontation with the United States government, and China's response to the coronavirus. Open for comment; Comment(s) posted.

The Impact of Technology and Trade on Migration: Evidence from the US

by Marius Faber, Andres Sarto, and Marco Tabellini

Labor mobility can re-equilibrate local labor markets after an economic shock. Both robot adoption and Chinese import competition between 1990 and 2015 caused large declines in manufacturing employment across US local labor markets (commuting zones, CZs). However, only robots were associated with a decline in CZ population, which resulted from reduced in-migration rather than by increased out-migration.

Taking on the Taboos That Keep Women Out of India's Workforce

by Julia Hanna

Giving women in rural India more control over household finances reduces the social stigma of working, says research by Natalia Rigol. Open for comment; Comment(s) posted.

Lifting the Lid on Turkey's Hidden Business History

by Sean Silverthorne

The business history of modern Turkey has been largely hidden from view, but a new book edited by Geoffrey Jones and Asli M. Colpan pulls back the covers. Open for comment; Comment(s) posted.

The Gender Gap in Self-Promotion

by Christine L. Exley and Judd B. Kessler

Many organizations and job applications require individuals to assess their own ability and performance. When women communicate to potential employers, however, they systematically give less favorable assessments of their own past performance and potential future ability than equally performing men. The study rules out potential explanations for the gap and discusses implications.