Cooper Howes

Publications

[3] Bank Information Production Over the Business Cycle, Review of Economic Studies (forthcoming)

With Gregory Weitzner

[2] Financial Constraints, Sectoral Heterogeneity, and the Cyclicality of Investment, Review of Economics and Statistics (2025) 

• [PDF] [Online appendix] [Replication materials]

• [Also available as KC Fed Research Working Paper 21-06] [Coverage: NEP-DGE blog post]

[1] Why Does Structural Change Accelerate in Recessions? The Credit Reallocation Channel, Journal of Financial Economics (2022)

• • [PDF] [Online appendix]

  • [Also available as  KC Fed Research Working Paper 20-17]  [Coverage: Speech by Boston Fed President Susan Collins] 

Working papers

The Information Advantage of Banks: Evidence From Their Private Credit Assessments 

With Mehdi Beyhaghi and Gregory Weitzner

• Revise and resubmit at Journal of Finance

In classic theories of financial intermediation, banks mitigate information frictions by monitoring and producing information about borrowers. However, it is difficult to test these theories without access to banks' private information. In this paper, we use supervisory data containing banks' private assessments of their loans' expected losses. We show that changes in expected losses predict firms' future stock returns, bond returns, and earnings surprises, and that banks use this information to allocate credit. Our findings show that banks' information production and monitoring create an information advantage over financial markets, even among publicly traded firms.

Financial Deepening, Investment Producers, and the Great Moderation

With Neil White

During the Great Moderation, employment volatility plummeted while financial volatility rose sharply. We show that changes within the manufacturing sector drove both patterns and provide causal evidence linking these effects to improved access to capital markets ("financial deepening"). To explain our findings, we construct a multisector model with financially constrained producers. Easing financial constraints in the model parsimoniously replicates the aggregate and sector-specific changes in both real and financial volatility observed during the Great Moderation, and we show that this result is driven by manufacturing's outsized role in producing investment. Our results highlight the unique importance of investment producers in understanding how financial frictions distort real activity.

The Aggregate Effects of Targeted Tax Cuts

This paper analyzes how different types of tax changes can have different economic impacts. Using Congressional records, I decompose the plausibly exogenous legislative provisions identified in Romer and Romer (2010) into one of five categories: business marginal rate provisions, business investment incentives, other business provisions, individual marginal rate provisions, and other individual provisions. I find that the effects differ crucially depending on which types of taxes are being cut. I use my results to analyze the effects of the Tax Cuts and Jobs Act of 2017 and estimate the Act will boost GDP growth by an average of between 1.4-2.3 percentage points per year from 2018 through 2020. This is significantly higher than most existing estimates of the near-term effects; while the Act's relative permanence and its distributional considerations suggest that these numbers should be thought of as an upper bound, they also support the idea that other estimates are understating the stimulative effects of the Act by not fully accounting for its composition.

Work in progress

Money and Power (With Joshua Blonz and Joakim Weil)

What Do We Learn from Reading Every FOMC Transcript? (With Olivier Coibion, Marc Dordal i Carreras, and Yuriy Gorodnichenko)  [Slides]

Tax Shocks and Financial Heterogeneity (With Choongryul Yang)

Non-refereed publications

Monetary Policy and Intangible Investment (With Alice von Ende-Becker), Federal Reserve Bank of Kansas City Economic Review  (2022)

Inflation in 1972: A Cautionary Tale, Federal Reserve Bank of Kansas City Economic Bulletin (2022)

Barclays Research reports on student loans (available upon request)

• The Dark Side of "Good" Debt (2012), An Educated Mess (2012), A Closer Look at the Great Rate Debate (2013)

• Media coverage: New York Times, Politico, Reuters