Hi, I am Theofanis (Fanis) Papamichalis.

I am currently a Lecturer in Economics at Yale University. Previously, I was an Assistant Teaching Professor at the Faculty of Economics, University of Cambridge, and held the Greta Burkill Fellowship in Economics at Murray Edwards College, Cambridge.

My research interests centre around macro-finance, general equilibrium and theoretical and empirical finance, with current work focusing on topics such as  the impact of optimism and default on the macroeconomy, the implications of market structure on the stock market and the connection between the time series and the cross-section of stock market returns.

My recent paper, “From Anomalies to Norms: A Unified Framework for Sentiment, Risk and Mispricing" shows, both theoretically and empirically, an overall negative contemporaneous relationship between aggregate stock market returns and cross-sectional anomalies. 

I hold degrees from MIT (Masters in Finance), Cambridge (Masters of Advanced Study in Mathematics) and Imperial (Masters of Engineering).

Contact Information

email: theofanis.papamichalis@yale.edu

address: Room B131, 28 Hillhouse Ave, New Haven, USA.

For more detail, click here: [CV] 

New: “Beliefs and the Net Worth Trap", with  Goutham Gopalakrishna and Seung Joo Lee - accepted (June 2025): Journal of Economic Theory 

Abstract: We develop a tractable framework to explore how beliefs about long-term economic growth shape macroeconomic and financial stability. By modeling belief distortions among productive capital users, we provide an analytical characterization of a novel phenomenon termed the “net worth trap”, wherein overly optimistic or pessimistic beliefs among productive agents prevent them from rebuilding wealth, causing permanent inefficiencies. A procyclical swing in beliefs reduces or exacerbates the instability, indicating that the type of belief when the economy is vulnerable has important consequences on financial stability and macroeconomic dynamics.

New Updated Version (June 2025): “A Macro-Finance Model of Credit Spreads ", with C. Christopher Hyland, Dimitrios Tsomocos, and Nikolaos Romanidis

Abstract: We argue that fluctuations in corporate credit spreads arise from the time-varying risk-bearing capacity of financial intermediaries. Empirically, we show that the primary broker dealers’ leverage ratios closely tracks the excess bond premium, highlighting that intermediary balance sheets, rather than firm-level default fundamentals, drive the dominant component of spreads. Guided by this evidence, we build a continuous-time heterogeneous-agent model in which productive experts finance capital with defaultable debt subject to an equity constraint and an endogenous, non-pecuniary default penalty. Three results obtain. (i) The model resolves the credit-spread puzzle: even after conditioning on expected default losses, equilibrium spreads include a sizable wedge that varies with intermediary net worth. (ii) Default is non-neutral: higher default rates raise the user cost of capital, depress investment, and amplify aggregate volatility. (iii) Default penalties have a non-monotonic welfare effect: lax penalties induce excessive leverage ex ante, whereas stringent penalties accelerate fire-sale deleveraging ex post. We characterise optimal policy by solving for the social planner’s solution to pin down an interior default penalty schedule.

.