100 Years of Rising Corporate Concentration 

(with Spencer Kwon and Yueran Ma)

Forthcoming, American Economic Review

We collect data on the size distribution of U.S. businesses for 100 years, and use these data to estimate the concentration of production (e.g., asset share or sales share of top businesses). The data show that concentration has increased persistently over the past century. Rising concentration was stronger in manufacturing and mining before the 1970s, and stronger in services, retail, and wholesale after the 1970s. The results are robust to different measurement methods and consistent across different historical sources. Our findings suggest that large firms have become more important in the U.S. economy for a long period of time.


We document that monetary policy has a substantial impact on innovation activities. After a tightening shock of 100 basis points, research and development (R&D) spending, venture capital (VC) investment, patenting in important technologies, as well as a patent-based aggregate innovation index decline in the following 2 to 4 years. Our findings suggest that monetary policy may affect the productive capacity of the economy in the longer term, in addition to the well-recognized near-term effects on economic outcomes. 

The Big Bang: Stock Market Capitalization in the Long Run 

(with Dmitry Kuvshinov)

Journal of Financial Economics, 2022, Vol. 145 (2), pp. 527-552

We study trends and drivers of long-run stock market growth in 17 advanced economies. Between 1870 and the 1980s, stock market capitalization grew in line with GDP. But over subsequent decades, an unprecedented expansion saw market cap to GDP ratios triple and remain persistently high. While most historical stock market growth was driven by issuances, this recent expansion was fueled by rising equity prices. We show that the key driver of this structural break was a profit shift towards listed firms, with listed firm profit shares in both GDP and capital income doubling to reach their highest levels in 146 years.

[Data: Excel, Stata] [Replication Files] [ProMarket Summary] [VOX EU]

Sovereigns Going Bust: Estimating the Cost of Default 

(with Dmitry Kuvshinov)

European Economic Review, 2019, Vol. 119, pp. 1-21. 

What is the cost of sovereign default, and what makes default costly? This paper uses a novel econometric method – combining local projections and propensity score weighting as in Jordà and Taylor (2016) – to study these questions. We find that default generates a long-lasting output cost – 2.7% of GDP on impact and 3.7% at peak after five years – but in the longer term, economic activity recovers. Our findings suggest that financial autarky and sovereign-banking spillovers play a key role in generating the cost of default.

Working Papers

Superstar Firms through the Generations 

(with Yueran Ma and Benjamin Pugsley)

We study the landscape of the largest American companies over time. Among the top manufacturing companies today, in the 1950s, and in the 1910s, birth years always cluster around 1900, but the individual companies have changed. Among the top retailers and wholesalers today and in the past, the age distribution appears stationary. The data suggest that certain settings produce special generations of entrants that give rise to superstar firms for decades to come. We show that the persistent dominance of special cohorts cannot arise in a model with i.i.d. entrant draws. Instead, it can arise from the adoption of a new technology that exhibits higher returns to scale in the presence of learning by doing.

We show that across advanced economies, bank asset risk declined materially between 1870 and 2016. But this trend was accompanied by large increases in leverage, which meant that bank equity risk increased. Moreover, losses on bank assets have become to be associated with increasingly large output gaps. We show that this higher predictive power is linked to the secular increases in bank leverage.

Survival of the Biggest: Large Banks and Crises since 1870

(with Matthew Baron and Moritz Schularick)

This paper studies a newly compiled data set of annual balance sheets of more than 11,000 commercial banks across 17 advanced economies since 1870. The new data expose the central role of large banks for credit cycles and financial instability throughout modern financial history. Large banks account for a large and growing share of asset growth during credit booms, take more risks, contract lending more in crises, and suffer higher losses. Yet despite their worse performance, large banks are less likely to fail during crises and even tend to gain market share.

We show that increasing bank profitability is associated with higher medium-term crisis risk and declining GDP growth in a long-run panel of advanced economies. To explain these findings, we link bank profitability to the credit cycle. An increase in profitability of the banking sector predicts rising credit-to-GDP ratios and the start of a credit boom. We decompose bank profitability into its sources and uses to study the channels behind this “profit-credit cycle” in more detail. The analysis supports a supply side view of the credit cycle and aligns with recent behavioral credit cycle models. 

(with Dmitry Kuvshinov) [CEPR Discussion Paper]

Across 17 advanced economies, the expected risky return has been in steady long-run decline, but its trend is markedly different from that in the safe rate. As a consequence, the ex ante risk premium exhibits large secular movements, and risk premia and safe rates are strongly negatively correlated. We provide evidence linking these differential risky and safe rate trends to secular variation in macroeconomic risk.

What is the effect of monetary policy on bank profitability? My analysis reveals one key finding: Banking sector spreads increase when monetary policy tightens, yet banking sector profits fall. The disconnect between spreads and profits is driven by a sharp increase in loan losses and a contraction in credit growth. I also show that the profitability effect of policy rate hikes is highly state dependent. It is increasing in the share of mortgage credit in the economy and decreasing in the share of deposit finance in bank liabilities.