Search Results
Working Paper
Attention Allocation and Belief Distortions
Using microdata from the Michigan Survey of Consumers, we study how within-household reallocations of attention across news affect inflation expectation bias, measured relative to a real-time, machine-learning full-information benchmark. Shifting attention toward unfavorable (favorable) economic news increases (decreases) forecast bias substantially, while dropping attention to an unfavorable topic has little effect. The largest bias increases come not from inflation news itself, but from attention to unfavorable social, political, and geopolitical narratives. Aggregate news sentiment has no ...
Working Paper
Financial Consequences of Identity Theft
We examine how a negative shock from identity theft affects consumer credit market behavior. We show that the immediate effects of fraud on credit files are typically negative, small, and transitory. After those immediate effects fade, identity theft victims experience persistent increases in credit scores and declines in reported delinquencies, with a significant proportion of affected consumers transitioning from subprime-to-prime credit scores. Those consumers take advantage of their improved creditworthiness to obtain additional credit, including auto loans and mortgages. Despite having ...
Working Paper
Financial Consequences of Severe Identity Theft in the U.S.
We examine how a negative shock from severe identity theft affects consumer credit market behavior in the United States. We show that the immediate effects of severe identity theft on credit files are typically negative, small, and transitory. After those immediate effects fade, identity theft victims experience persistent increases in credit scores and declines in reported delinquencies, with a significant proportion of affected consumers transitioning from subprime-to-prime credit scores. Those consumers take advantage of their improved creditworthiness to obtain additional credit, ...
Report
Investor Attention to Bank Risk During the Spring 2023 Bank Run
We track investor perceptions of bank risk during the 2023 bank run using “balance sheet betas” — the covariance of a bank’s stock returns with returns on factors based on uninsured deposits and unrealized securities losses in 2022Q3. Betas are mostly zero before the run but rise significantly during it, and even further when a bank is in the news. These increases are only weakly related to bank fundamentals. Once the Fed’s liquidity support is announced, betas become insensitive to losses on eligible collateral. Public news and government interventions, rather than fundamentals ...