Fourth ECB Annual Research Conference

Welcoming remarks

Luis de Guindos (Vice-President, European Central Bank)

Session I

Chair: Luc Laeven, European Central Bank

A theory of falling growth and rising rents

A model to explain the following recent phenomena: a fall in the long-run growth rate, rising firm concentration and profits, and a decline in labour’s share of national income. The driving force in the model is falling firm-level costs of operating in multiple markets, owing to, for instance, innovation in IT.

• Philippe Aghion* (London School of Economics)
• Antonin Bergeaud (Banque de France)
• Timo Boppart (Institute for International Economic Studies)
• Peter Klenow (Stanford University)
• Huiyu Li (Federal Reserve Bank of San Francisco)

Discussant: Gilles Saint-Paul (Paris School of Economics)

Interview with Philippe Aghion

On the rise of fintechs – credit scoring using digital footprints

A study with detailed data from Germany, finding that the digital footprint – information that people leave online simply by accessing or registering on a website – is very helpful for predicting consumer default. The digital footprint affects consumers’ access to credit and reduces default rates.

• Tobias Berg (Frankfurt School of Finance and Management)
• Valentin Burg (Humboldt University Berlin)
• Ana Gombović (Frankfurt School of Finance and Management)
• Manju Puri* (Duke University)

Discussant: Daniel Paravisini (London School of Economics)

Retirement in the shadow (banking)

A study examining the hypothesis that the recent growth in securitisation and shadow banking activities has been caused, in part, by the rise in life expectancy at retirement. The latter has increased the demand for assets for saving, which securitisation and shadow banks have attempted to satisfy.

• Guillermo Ordoñez* (University of Pennsylvania)
• Facundo Piguillem (Einaudi Institute for Economics and Finance)

Discussant: Alberto Martin (European Central Bank and CREI)

Session II

Chair: Isabel Vansteenkiste (European Central Bank)

How costly are mark-ups?

The cost of markups – higher prices due to monopoly power of firms in product markets – for social welfare is large, mainly because markups reduce output and consumption. Policies aimed at reducing firm concentration and markups would have undesirable side effects.

• Chris Edmond (University of Melbourne)
• Virgiliu Midrigan* (New York University)
• Daniel Yi Xu (Duke University)

Discussant: Jan Eeckhout (Universitat Pompeu Fabra)

Taxation and innovation in the 20th century

A study with new datasets from the United States over the 20th century, finding that higher corporate and personal income tax rates reduce the quantity and quality of inventive activity and shift its location.

• Ufuk Akcigit (University of Chicago)
• John R. Grigsby (University of Chicago)
• Tom Nicholas (Harvard University)
• Stefanie Stantcheva* (Harvard University)

Discussant: Harry Huizinga (Tilburg University)

Interview with Stefanie Stantcheva

Panel discussion: 20 years of the euro

Chair: Martin Wolf (Financial Times)

• Erik Jones (Johns Hopkins University)
• Carmen Reinhart (Harvard University)
• Guido Tabellini (Bocconi University)
• Silvana Tenreyro (London School of Economics and Bank of England)

Adjourn

Conference dinner - by invitation only

Session III

Chair: Sergio Nicoletti Altimari (European Central Bank)

Collateral booms and information depletion

Lenders that finance risky investment projects can protect themselves from losses by demanding collateral, or by conducting costly screening which generates information about projects. Credit booms driven by high collateral values reduce the incentive to produce information. Such booms can lead to deep crises and slow recoveries because information about investment projects takes time to rebuild.

• Vladimir Asriyan* (Centre de Recerca en Economia Internacional)
• Luc Laeven (European Central Bank)
• Alberto Martin (European Central Bank

Discussant: Augustin Landier (HEC Paris)

Investing outside the box: evidence from alternative vehicles in private capital

Recent decades have seen a transformation of the private equity industry, with a greater diversity of fund structures emerging alongside the traditional monolithic funds. This paper uses a previously unexplored dataset to examine the use of the new funds. It documents a steep increase in the capital directed to such funds, which approached a 40% share of all private equity commitments in 2017.

• Josh Lerner (Harvard University)
• Jason Mao (State Street Global Exchange)
• Antoinette Schoar* (Massachusetts Institute of Technology)
• Nan R. Zhang (State Street Global Exchange)

Discussant: Per Strömberg (Stockholm School of Economics)

Session IV

Chair: Luc Laeven (European Central Bank)

Jean Monnet Lecture on "Machine learning in economics"

by Susan Athey (Stanford University)

Interview with Susan Athey

Session V

Chair: Massimo Rostagno (European Central Bank)

State-dependent effects of monetary policy: the refinancing channel

In the United States, most mortgages have a fixed interest rate and no prepayment penalties. The impact of monetary policy depends on how many households decide to refinance their mortgages. A given interest rate cut is more powerful when preceded by a sequence of rate cuts: when rates have been falling, many households have fixed mortgage rates that are higher than the current market rate.

• Martin Eichenbaum* (Northwestern University)
• Sergio Rebelo (Northwestern University)
• Arlene Wong (Princeton University)

Discussant: Benjamin Moll (Princeton University)

Interview with Martin Eichenbaum

End of conference