We introduce a macro-finance model in which monetary authorities adjust the money supply by targeting not only output and inflation but also the slope of the yield curve. We study the impact of McCallum-type rules on capital growth, the volatility of interest rates, the spread between long- and...

We show that an institutional investor whose performance is evaluated relative to a narrow benchmark trades in ways that exposes a retail investor to higher risks and welfare losses. In our model, the institutional investor is different from the retail investor because she derives higher utility...

We show that when investors suffer from endogenous asymmetric money illusion, the usual proportionality between money supply and nominal prices commonly present in frictionless economies is eliminated. This drives changes in the money supply to cause real price fluctuations. Nevertheless, the...

We assess the impact of the Brazilian government’s conditional cash transfer program Bolsa Fam´ılia on unhealthy consumption by households, proxied by expenses with ultra-processed food, alcohol, and tobacco products. Using machine learning techniques to improve the propensity score...

We develop a dynamic capital structure model where interest rates are stochastic and driven by three state variables: level, slope, and curvature of the yield curve in an arbitrage-free Nelson-Siegel model. Our analysis suggests that the yield-curve factors are critical determinants of the...

We show that deviations from the firm's target leverage are priced in the cross-section of stock returns and that the relationship between these quantities is nonlinear. The concave nonlinear relationship between deviation from the target leverage and next-period return is strong during economic...

We develop a general equilibrium model where investors experience money and nominal-price illusions. Our theoretical results show that the compounding effects of money and nominal-price illusions increase (decrease) stock prices (yields). Our empirical analysis documents that the effect of money...