Finance Matters

Finance Matters

Finance Matters: The MIT Sloan Finance Group Blog

Finance Matters is the MIT Sloan Finance Group’s platform for sharing the latest on Finance faculty research, perspectives on financial industry news, MIT Sloan finance-related events, and will feature guest posts from our faculty, students, alumni, and affiliates.

Evidence of the Financial Accelerator using Corn Fields

Posted by Rajkamal Iyer on February 9, 2015

The role of financial frictions in amplifying and propagating economic shocks has received significant attention in explaining fluctuations over the business cycle. Financial frictions introduce a wedge between the cost of external finance and the opportunity cost of internal funds. This implies that the strength of firms’ balance sheets will affect the manner in which their investment activity reacts to economic shocks. Current firm investment affects future balance sheet strength, creating a dynamic feedback loop that propagates economic shocks over…
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Unfunded State and Local Healthcare Benefits, the Elephant in the Room?

Posted by Deborah Lucas on December 17, 2014

Last week Bob Pozen, a Visiting Senior Lecturer here at MIT Sloan with a distinguished background in government, business and education gave an eye-opening lunch talk. The topic was “Other Post-Employment Benefits” or OPEBs—which is accounting jargon for the liabilities governments incur for retiree healthcare. Here’s what he found: “The 30 largest American cities had over $100 BILLION in retiree healthcare deficits in 2013, as estimated by the Pew Charitable Trust. In that year, New York City showed the most…
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Tackling the challenges of governments as financial institutions

Posted by MIT Sloan Finance Group on October 2, 2014

From the MIT Sloan Newsroom: Governments not only regulate the private financial marketplace, they also own and operate some of the world’s largest financial institutions. Government agencies make trillions of dollars of loans, insure large and complex risks, and design new financial products. Yet their leaders often lack the analytical support and rigorous financial training of their peers in the private sector, and transparency is often lacking.   The MIT Center for Finance and Policy officially launched this month to…
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Opinions expressed in this blog are that of individuals and do not reflect the general opinion of Massachusetts Institute of Technology and MIT Sloan.