Markus' Academy

MarkusAcademy
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Princeton University's Markus Brunnermeier hosts conversations with leading academics and policymakers on the global economy, global politics, and artificial intelligence.

  1. 6d ago

    The Future of the U.S. Financial System | Markus' Academy | Ep. 62

    Follow the link for the full summary: https://markusacademy.substack.com/p/the-future-of-the-us-financial-system Link to sign up for the webinar series: https://markusacademy.substack.com/ On April 15, 2021, Gary Gorton joined Markus’ Academy for a lecture on the recent changes and future of the U.S. financial system. Gorton is the Frederick Frank Class of 1954 Professor of Finance at the Yale School of Management. Download the slides here. Summary: The financial crisis has not been solved because financial crises are inherent in market economies. There are fundamental changes in the economy — banking is moving out of the regulated sector. Money market mutual fund reforms have driven retail funds out of existence, which has led to a rise of variable denomination floating rate demand notes. Stablecoins, like tether, have been able to maintain a price at 1 and seem fairly successful. Stablecoins are essentially unregulated free banking which issue deposits. There are several challenges to stablecoins. The fundamental theorem of bank regulation stipulates that bank regulators can only decide the location of the banking system.

  2. 6d ago

    Emerging Markets: Taper Tantrum Redux? | Markus' Academy | Ep. 61

    Follow the link for the full summary: https://markusacademy.substack.com/p/emerging-markets-taper-tantrum-redux Link to sign up for the webinar series: https://markusacademy.substack.com/ On April 1, 2021, Robin Brooks joined Markus’ Academy for a lecture on “Emerging Markets: Taper Tantrum Redux?” Brooks is the Chief Economist of the Institute of International Finance. Download the slides here. Summary: The taper tantrum began in 2013 when Bernake floated the idea of adjusting the monthly volume of purchases, shocking markets.Financial markets in 2013 became very sensitive to data surprises. With the rising US long-term yields, the risk of an overshoot in real interest rates is building. Tracking foreign investor flows to emerging markets shows that there was a huge drawdown in flows at the height of COVID shock. EMs can still have large currency devaluations if emerging market flows are not greatly negative due to account deficits. Some pre-existing conditions coming into 2021 look better than 2013. Although emerging markets are better positioned now, growth in EMs has been struggling for many years.

  3. 6d ago

    International Taxation in a Digital World | Markus' Academy | Ep. 60

    Follow the link for the full summary: https://markusacademy.substack.com/p/international-taxation-in-a-digital Link to sign up for the webinar series: https://markusacademy.substack.com/ On March 25, 2021 ,Alan Auerbach joined Markus’ Academy for a lecture. Auerbach is the Director of the Robert D. Burch Center for Tax Policy and Public Finance at the University of California, Berkeley. Download the slides here. Highlights There has been a steady downward trend of G-7 corporate tax rates in the last 25 years. These changes increase the likelihood of inversion — reorganizing corporate structure to change corporate residence, relocating production to low-tax jurisdictions, and, beyond the relocation of production, shifting profits to low-tax jurisdictions.The newest challenge is with companies that provide digital services (like Google, Facebook). There are multiple solutions to this need for reform: Countries can enact patent boxes that tax IP at a lower rate. One rationale is that this would encourage IP R&D. In addition, the income associated with intellectual property is more mobile. Countries can also tighten tax rules to limit profit shifting and tax avoidance. They can also try a hybrid approach — the US, for example, adopted a territorial tax but also introduced the GILTI provision, which is a worldwide accrual-based minimum tax. A fourth approach focuses the tax base on destination, or the location of final consumers. This leads to incentive compatibility where the countries are willing to adopt the systems on their own, without the need for international cooperation or enforcement.A Residual Profit Allocation by Income reform is an incremental approach and is good when the public is less comfortable with a major tax change. The Destination-Based Cash Flow Tax is a more revolutionary approach which implements a cash flow tax on domestic operations with border adjustments. In conclusion, we are moving towards destination-based taxation through digital taxation, unilateral partial actions, and attempts at cooperative approaches.

  4. 6d ago

    Modern Financial Intermediation | Markus' Academy | Ep. 59

    Follow the link for the full summary: https://markusacademy.substack.com/p/modern-financial-intermediation Link to sign up for the webinar series: https://markusacademy.substack.com/ On March 19, 2021, Amit Seru joined Markus’ Academy for a talk on his recent work on modern financial intermediation (Buchak et al., 2024). Seru is a Professor of Finance at the Stanford Graduate School of Business, a Senior Fellow at the Hoover Institution and Stanford Institute for Economic Policy Research (SIEPR), and a Research Associate at the National Bureau of Economic Research (NBER). Highlights: The traditional view of banking where deposit taking institutions originate most loans in the economy and keep these loans on their balance sheets is obsolete. The modern view of the intermediation is different and needs to incorporate two major aspects: activity that has migrated to shadow banks and changes to business model of traditional banks.Shadow banks have a different business model from banks, where they retain very little and mainly sell to GSEs. Another aspect that is important is how banks and shadow banks fund their activities. Shadow banks finance their activity with much more equity compared to banks.Seru proposes that the modern view of intermediation — and regulatory framework around it — needs to consider all these aspects. Modern intermediation viewed this way also allows us to look at shadow bank choices and ask how much lending is possible with much higher capitalization. Regulatory burden/pressure is not just about capital requirements. Modern intermediation also implies a different outlook on the nature of debt relief transmission during periods of distress. In conclusion, views and regulations focused only on bank balance sheets are very incomplete. Assessing financial stability in this modern era involves understanding the business model of shadow banks and traditional banks, the industrial organization of the market and the equilibrium interaction of intermediaries.

  5. 6d ago

    The Rise of Fintech Intermediaries | Markus' Academy | Ep. 58

    Follow the link for the full summary: https://markusacademy.substack.com/p/the-rise-of-fintech-intermediaries Link to sign up for the webinar series: https://markusacademy.substack.com/ On March 18, 2021, Amit Seru joined Markus’ Academy for a talk on his recent work on the rise of fintech intermediaries (Buchak et al., 2018, 2025). Seru is a Professor of Finance at the Stanford Graduate School of Business, a Senior Fellow at the Hoover Institution and Stanford Institute for Economic Policy Research (SIEPR), and a Research Associate at the National Bureau of Economic Research (NBER). Highlights: Shadow banks who don’t take deposits and are therefore not regulated like a traditional bank have disrupted every aspect of traditional banking activity from lending to payments to wealth management and investment banking. One reason for this rise in the lending market —but it could apply to other bank activities as well— is that banks were heavily regulated after the Great Recession, which dampened their activity, a gap that shadow banks filled. However, Seru argues that many fintech shadow banks that employ new IT technologies are in fact expensive; they gain market share by providing new products to consumers (e.g., offering convenience) who have a high willingness to pay. Another window into what technology is doing to intermediation pertains to iBuyers, intermediaries who have a “balance sheet” and rely on technology to buy and sell homes instantly.Seru’s model found that technology elements of “quickness” (fast speed) and “accurate” (low adverse selection) are essential to iBuyer market share. In conclusion, fintech intermediaries have facilitated massive expansion of non-bank institutions.

  6. 6d ago

    Taming a Minsky Cycle | Markus' Academy | Ep. 57

    Follow the link for the full summary: https://markusacademy.substack.com/p/taming-a-minsky-cycle Link to sign up for the webinar series: https://markusacademy.substack.com/ On March 11, 2021, Ivan Werning joined Markus’ Academy for a talk on his recent work with Emmanuel Farhi. Werning is the Robert M. Solow Professor of Economics at MIT. Download the slides here. Highlights: The paper examines a Minsky cycle starting with a boom with rising asset prices and leverage followed by a Minsky moment where asset prices fall, hurting the real economy. Motivation for macroprudential policies include financial fragility, aggregate demand stabilization, and monetary policy constraints. Targets include the macroeconomic goal of the current recession and financial stability goal. There is a tradeoff between these goals and the instruments available.The level of debt from time 0 to 1 is going to negatively impact asset price at time 1 and there is a one-to-one relationship between that asset price and output. Absent macroprudential tools, monetary policy should lean against the economy at time 0 in order to reduce the bust at time 1. If macroprudential tools are available, one should use them to limit leverage at time 0 in a world with rational expectations.

  7. 6d ago

    International Currency Competition | Markus' Academy | Ep. 56

    Follow the link for the full summary: https://markusacademy.substack.com/p/international-currency-competition Link to sign up for the webinar series: https://markusacademy.substack.com/ On March 4, 2021, Jean-Pierre Landau joined Markus’ Academy for a lecture on International Currency Competition: The Digital Dimension. Landau is an affiliated Professor of Economics at Sciences Po. A former Deputy Governor of the Banque de France, he has held senior roles at the IMF, World Bank and the EBRD. Download the slides here. Highlights: Libra was a wake up call for the international monetary community. After Libra, there was an explosion in interest in Central Bank Digital Currencies (CBDCs). Digitalization may destabilize the equilibrium between private and public money in our societies. A triple Governments’ response. In recent years, governments have increased regulation, pushed for CBDCs, and accelerated fast payments. In implementing CBDCs, central banks will have to face tradeoffs — they don’t want to disintermediate the banks but also have to consider a potential loss of privacy for small payments.As regards international currency competition, digitalization will potentially increase the use of those currencies that have digitally developed as medium of exchange (China).

  8. 6d ago

    A Chronic Pandemic? Vaccine Geopolitics | Markus' Academy | Ep. 55

    Follow the link for the full summary: https://markusacademy.substack.com/p/a-chronic-pandemic-vaccine-geopolitics Link to sign up for the webinar series: https://markusacademy.substack.com/ On February 25, 2021, Monica de Bolle joined Markus’ Academy for a talk A Chronic Pandemic? Vaccine Geopolitics. de Bolle is a Senior Fellow at the Peterson Institute for International Economics and a adjunct lecturer and former director for Latin American Studies and Emerging Markets at the School of Advanced International Studies at Johns Hopkins University. Download the slides here. Highlights COVID-19 will likely be a chronic pandemic. Testing has primarily focused on PCRs which are diagnostic tests that tell you if you have COVID. However, they are not good for epidemiological control because they fail to catch people in the infectious window and therefore make isolation and contact tracing much more difficult. As a virus replicates, it will mutate. In terms of vaccine geopolitics, rich and developed countries have more doses contracted that they need. Economic recovery is entirely dependent on vaccines.In conclusion, vaccines will have to be regularly updated, there will be fiscal consequences of the chronic disease burden, debt and deficit burdens will have to be evaluated for a chronic crisis, inequality will continue to be on the rise, high economic volatility may rise from sporadic lockdowns, and we must rebuild economics around public health.

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Princeton University's Markus Brunnermeier hosts conversations with leading academics and policymakers on the global economy, global politics, and artificial intelligence.

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    MarkusAcademy
  • Years Active
    2026
  • Episodes
    62
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