Russia's invasion of Ukraine has inspired me to come up with an interesting theoretical concept. I'll lay it out first, and then try to explain the reasoning behind it and how it can be used to explain potential outcomes of Russia's Ukraine invasion.  The ambition-to-competence ratio of government officials is an exponential function of the kleptocracy level of a country. It is best defined as ambition plus loyalty divided by one’s intrinsic level of competence:  A-C ratio = (ambition + loyalty ) / intrinsic competence  In high-level kleptocracies, where the government is co ..read more

My new paper (open access; meaning free to read) is out in the new edition of Public Choice (published online first in February this year). This was my second PhD paper at Oxford, and one I am particularly fond of given the importance of the topic and one of the cornerstone arguments of my upcoming book Elite Networks: The Political Economy of Inequality (more on that below).  What's the main finding?  In short, I looked at the effect of political connections on the allocation of TARP funds to US banks, and found that TARP recipients that lobbied the government, donated to campa ..read more

This year's Nobel prize in economics was awarded to three brilliant economists, David Card, Joshua Angrist, and Guido Imbens for revolutionizing the way economists (and social scientists) do empirical research. Specifically, Card got it for his contributions to labor economics, and Angrist and Imbens got it for causal inference, but all three made breakthrough contributions of applying the scientific method to economics. In the field, we call it the "credibility revolution". I am very familiar with the work of all three as I've used their papers very often while learning about causal inferen ..read more

Russia's invasion of Ukraine has inspired me to come up with an interesting theoretical concept. I'll lay it out first, and then try to explain the reasoning behind it and how it can be used to explain potential outcomes of Russia's Ukraine invasion.  The ambition-to-competence ratio of government officials is an exponential function of the kleptocracy level of a country. It is best defined as ambition plus loyalty divided by one’s intrinsic level of competence:  A-C ratio = (ambition + loyalty ) / intrinsic competence  In high-level kleptocracies, where the government is co ..read more

This article was first published on Seeking Alpha on July 15th 2021. This article contains updated graphs for the subsequent month and a half (a new version will look at the situation again in October).  A lot of investors and analysts like to look at various stock market indicators for signs of widespread market hubris, overconfidence, greed (& fear), or an upcoming contraction. Many like to point out that stock valuations are at their extremes, particularly in the tech sector, or that, for example, the Shiller PE ratio is running at a 39 multiple (the only time it was higher wa ..read more

In addition to monetary and fiscal bubbles, another potential issue that could be exacerbated by a prolonged period of low interest rates are rising corporate debt levels of publicly listed nonfinancial companies. Total corporate debt of such companies has already reached historical highs by surpassing $10 trillion in Q1 2020, and is likely to keep growing in the months to come. Adding to this another 5.5 trillion of corporate debt from SMEs and other non-listed companies the total corporate debt size in the US is now at 73% of GDP. This is still lower than household debt in 2009 which reached ..read more

My new paper (open access; meaning free to read) is out in the new edition of Public Choice (published online first in February this year). This was my second PhD paper at Oxford, and one I am particularly fond of given the importance of the topic and one of the cornerstone arguments of my upcoming book Elite Networks: The Political Economy of Inequality (more on that below).  What's the main finding?  In short, I looked at the effect of political connections on the allocation of TARP funds to US banks, and found that TARP recipients that lobbied the government, donated to campa ..read more

In the previous blog I analyzed the stunning divergence between the markets and the real economy. I emphasized three particular reasons for why this is happening: (1) huge monetary and fiscal stimuli that started the V-shaped rebound on the markets in March; (2) exuberant (and by all means irrational) expectations driven primarily by the so-called retail investors (the subject of one of my next blogs), and (3) the asymmetry between firms driving the market (the top 5 big tech firms) vs the unlisted SMEs laying people off and declaring bankruptcies.  In this blog I will touch upon the pote ..read more

This year's Nobel prize in economics was awarded to three brilliant economists, David Card, Joshua Angrist, and Guido Imbens for revolutionizing the way economists (and social scientists) do empirical research. Specifically, Card got it for his contributions to labor economics, and Angrist and Imbens got it for causal inference, but all three made breakthrough contributions of applying the scientific method to economics. In the field, we call it the "credibility revolution". I am very familiar with the work of all three as I've used their papers very often while learning about causal inferen ..read more

A well-deserved Nobel prize for a man that helped establish a new field of behavioral economics, disrupted the academic milieu in the rigid field of finance, and successfully started implementing his ideas as actual policies in a number of countries (most famously through the Nudge Unit in the UK - officially Behavioural Insights Team - set up under Cameron's administration, and the White House Social and Behavioral Science Team, set up under Obama's administration). It wouldn't be exaggerating to say that Thaler's scientific contributions were among the most applicable of all Nobel prize ..read more