How does growing international financial diversification affect firm-level and aggregate labor shares? We study this question using a novel framework of firm labor choice in the face of aggregate risk. The theory implies a cross-section of labor risk premia and labor shares that appear as...

We study the role of firm heterogeneity in affecting business cycle dynamics and optimal stabilization policy. Firms differ in their degree of cyclicality, and hence, exposure to aggregate risk, leading to firm-specific risk premia that influence resource allocations. The heterogeneous firm...

In the wake of rising inflation in the aftermath of unprecedented debt financed stimulus packages, we ask: Can governments use real bonds (TIPS) as part of their debt portfolio to commit to stable inflation rates? We propose a novel framework of optimal debt management in the presence of sticky...

Why do some people go to the polling station, sometimes up to several times a year, while others always prefer to stay at home? This question has launched a wide theoretical debate in both economics and political science, but convincing empirical support for the different models proposed is...

We use a credible regression discontinuity design to estimate causal education effects. Pupils in the Swiss education system had to pass a centrally organized exam that classified them into different levels of secondary school, and that ultimately determined their educational degree. A major...

In times when elevated government debt raises concerns about dimmer global growth prospects, we ask: How can the government provide incentives for innovation in a fiscally sustainable way? We address this question by examining the Ramsey problem of finding optimal tax and subsidy schemes in a...

Do emotions affect the decision between change and the status quo? We exploit exogenous variation in emotions caused by rain and analyze data on more than 870,000 municipal vote outcomes in Switzerland to address this question. The empirical tests are based on administrative ballot outcomes and...

We study the effects of the largest adverse health shock in modern medicine - the 1918 influenza pandemic - on subsequent shifts in health-related attitudes and behavior and future-oriented policies. Our analysis builds upon self-digitized, individual-level death-register excerpts, vaccination...