In this paper, using firm-level data from CRSP, we document empirically that stock prices can simultaneously display “microefficiency” and “macroinefficiency;” an idea accredited to Paul Samuelson. To investigate the source of our empirical findings, we propose a theory of aggregation bias based on incomplete information and segmented markets.

In this paper, we study the economics of satellite launches to understand the impact of the collision risk externality on the dynamics of orbit use. We show that autocatalytic debris growth may render Earth’s orbit unusable, an outcome known as Kessler Syndrome. In our benchmark calibration, Kessler Syndrome can emerge anytime between the year 2040 and the year 2184,

In this paper, we show that dynamic models with dispersed information can be equivalently represented as models with hierarchical information. The result is useful because models with hierarchical information are easier to solve analytically.

In this paper, we study the impact of preferences for sustainable investing on the scale and composition of capital allocation across firms. While sustainable investing is shown to impact capital allocation in favor of clean firms in the long run, it might take a long time before the positive impact materializes.

In this paper, we establish and characterize a novel propagation mechanism under rational expectations, which we term confounding dynamics, that is responsible for the persistence of imperfect information across economic agents over time on relevant economic variables even when equilibrium variables are observed.