Finance AP @HarvardHBS. PhD @Wharton. Asset pricing, household finance, and political economy. History, sports, and chess fan. Cats are Crackers and Brie.
Philadelphia, PA
Joined March 2020
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Max Miller retweeted
A pullback by pension funds in Treasurys created a void filled by hedge funds. Now, the New York Fed is asking around about the potential risks. wsj.com/finance/investing/bo… via @WSJ
Very interesting article. We made a related point—and anticipated some of these developments—in a paper we released last year and presented at the NBER Spring Meetings: “The Effects of QE and Regulation on the Structure of the Financial System.” Our paper focuses on the euro area, but the economics is similar.
We show that, over the past decade, euro-area insurers—traditionally major investors in long-term bonds—have substantially reduced their presence in long-term government bond markets. Their share of outstanding long-term government bonds fell by roughly 10 percentage points.
If the natural holders of long-term bonds reduce their presence, someone else has to step in and fill the void...
Why did insurers retrench from long-term bonds?
Historically, European insurers offered long-term retirement policies with guarantees, making their role similar to that of pension funds in the US—hence the connection with the article.
These policies create long-duration liabilities that are naturally matched with long-duration bonds on the asset side. Long-term bonds are therefore insurers’ “natural habitat,” making them an important source of demand for long-term government debt.
Risk-based capital regulation and a prolonged period of very low long-term interest rates—associated with QE—made guaranteed retirement products less attractive. Insurers sold fewer of these products and shifted their product offerings toward other types of policies. As these liabilities declined, insurers’ demand for long-term government bonds declined with them.
With rates now higher, demand for guaranteed products is recovering. But insurers’ liabilities adjust slowly, and the recovery remains far below what would be needed to absorb the increase in the net supply of bonds to the private sector.
The broader point is that the past decade produced major structural changes in the financial system through the interaction of regulation and QE. While central banks were absorbing a large share of government bond issuance, these changes in the private investor base were less visible. A similar pattern occurred in the US.
As central banks withdraw, the resulting imbalances become much easier to see.
The paper is joint with @rogers_ciaran , Philippe and Stelios. We are about to release a revised draft. Here the older version:
matteoleombroni.github.io/Fi…
Max Miller retweeted
Measuring wealth inequality based on tradable assets reveals a stark divide between rich and poor. But when factoring in a different kind of asset, Assistant Professor James Paron finds the wealth gap is more complex than many people realize. brnw.ch/21x4OOf
Max Miller retweeted
Two Millennium index-rebalancing teams made $3.7 billion in June—more than half the fund's profits that month! This paper by Stefano Pegoraro, @mcsammon19, and John Shim asks: what is the index-rebalancing trade? Do its profits come at the expense of ordinary index investors?
Max Miller retweeted
The US government, citing national security authorities, has issued an export control directive to suspend all access to Fable 5 and Mythos 5 by any foreign national, whether inside or outside the United States, including foreign national Anthropic employees.
The net effect of this order is that we must abruptly disable Fable 5 and Mythos 5 for all our customers to ensure compliance.
Access to all other Claude models is not affected.
We apologize for this disruption to our customers. We believe this is a misunderstanding and are working to restore access as soon as possible.
Read our full statement: anthropic.com/news/fable-myt…
Max Miller retweeted
The notion that the world is less equal today than it was between 1910 and 1950 is just historically ridiculous and really makes the point that all these metrics should take much more seriously the vast welfare state systems that emerged during and in the immediate aftermath of this period.
This is the main blind spot of Piketty, Saez and Zucman’s empirical view of the world. They consider the distribution of tax rates, of which a substantial part fund social insurance, without considering the distribution of transfers and benefits. They consider the distribution of wealth without considering the value of entitlements…
This approach creates inequality metrics that would improve if we were to dismantle the welfare state. Which is exactly what this graph suggests by implying that the world is just as unequal today as it was during a period that saw two world wars and the greatest economic depression since the Industrial Revolution.
You cannot celebrate Roosevelt, Attlee and so on and use inequality metrics that make social insurance programs look like they foster inequality
Max Miller retweeted
CBO examines how incorporating Social Security wealth into standard measures of family wealth affects estimates of wealth inequality over time. cbo.gov/publication/62263
Max Miller retweeted
Hauge is incorrect, again. A better question would be *WHY has inequality INCREASED.. IF AT ALL?* Anti-liberals like Hauge will often complain about inequality, wave a graph and call it a day, convinced it vindicates their poor policy proposals. It doesn’t.
This paper from Harvard here finds that once you factor in social security into wealth measurements, *wealth inequality* hasn’t changed much since 1989 (1-1.9 points) which directly contradicts Saez & Zucman (2016).
Social security has grown enormously since 1989, from $7.2 trillion -> $40.6 trillion (2019). Another issue this paper notes is that with falling interest rates, assets are discounted much less harshly meaning their NPV (value) rises. Many authors fail to apply this to cash transfers, meaning their adjustments make it seem like inequality is higher than it actually is.
hbs.edu/ris/Publication%20Fi…
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Full transparency, I tend to be a bit more on @JesusFerna7026 side on where we should be focusing effort, but I just want to address the first point because I've seen a few people post it. I think it comes from a World Bank blog post from 2016. I had Perplexity Computer take a stab at figuring out how many recent NBER Dev Conference papers (2021-2025) were RCTs and it came out to around 45% not 10%. It's about 48% for Summer Institute and 40% in the DEV/BREAD meetings. I say this because I think its important that we agree on the basic facts. I'm not taking a stand on whether 45% is high or low, but it's certainly a lot larger than 10%.
These are the data Perplexity Computer generated. Feel free to peruse and tell me it is over/under estimating the true number. This relies on AI assignment of methodology and so probably isn't perfect.
gist.github.com/MaxMillerLab…
Max Miller retweeted
Polymarket prices are highly accurate in predicting future events. The source of that accuracy is less obvious.
In a new working paper, we find it is not the “wisdom of crowds,” but a small minority of informed traders.
Fewer than 3% of accounts appear to drive price discovery; most perform no better than chance.
The majority generates most of the volume but little of the information, effectively funding the informed minority.
Check the paper here: papers.ssrn.com/sol3/papers.…
🤖 Made with AI
Max Miller retweeted
Hilarious to watch tariff advocates like Oren lower the bar from "tariffs will bring back manufacturing jobs" to "tariffs will cause us to lose manufacturing jobs at a slower rate!"
Anywho, it's obvious when you look at *all* blue-collar employment that tariffs are killing jobs
Max Miller retweeted
This seems really bad but also like it was exactly the goal of systematically dismantling our federal government's standards & protections.
Max Miller retweeted
I know it's boring and repetitive to talk about how grossly evil Trump is, but the fact remains: Trump is grossly evil, in a way that's pretty much unprecedented in this country.
Max Miller retweeted
This is a devastating ruling for the government, finding Anthropic likely to prevail on essentially all of its theories for why the government’s actions were unlawful and unconstitutional. One of the things she mentions is the huge range of amici briefs supporting Anthropic (by the way, 0 supported USG)—so thanks to everyone here who signed on to FAI’s brief, or to one of the many many others. These things do matter. More importantly, you were on the right side of history.
On a personal note: some friends and allies of mine on the right have been angry at me for my own words and actions in all this. Anyone who thinks I spoke out for personal gain or trivial reasons against an administration I served in is crazy. It was a hugely costly decision for me. But Judge Lin’s ruling shows why I did it: this is a staggeringly illegal act by the government. That is why I am particularly honored to have been (implicitly) quoted in the ruling for calling this what it was when Secretary Hegseth initially made his announcement: an attempted act of corporate murder.
The case continues, but Anthropic has scored a very large win here. The real victors, however, are all red-blooded Americans who are, as the founders would have said, “jealous of their liberties.”
BREAKING: Anthropic has been GRANTED a preliminary injunction re: Pentagon 'supply chain risk' designation by Judge Rita Lin in California but is allowing a stay for one week storage.courtlistener.com/re…
Max Miller retweeted
Once again no politician has ever lied as much as him and none has ever been so honest either.
Max Miller retweeted
@R2Rsquared uses IMF forecasts to find that the unexpected change in fiscal spending explains cross country variation in post COVID inflation. In line with what my work with Robert Barro, but with a different approach!
How much did public deficits contribute to the inflation surge of 2021-24?
A popular argument notes that inflation rose in the US by almost as much as in other OECD countries. Yet, the US had a large fiscal stimulus in 2021 that most other countries did not. Therefore, the US fiscal stimulus did not contribute to the inflation surge. Is that right? No, it is not.
To inspect this claim, you can use expectations data. By virtue of its mandate, the IMF is one of the best forecasters of fiscal variables and all economists pay attention to them. The IMF also forecasts inflation; during 2021-24, it was as right or as wrong as other institutions or surveys.
Start from the IMF's forecasts in October of 2019 for the next 5 years of how much public debt would grow and what would be fiscal deficits, interest rates, inflation, and growth rates. Then look at the IMF April 2025 reports of those actual variables. Subtract one from the other and you have how much of the unexpected increase in public debt was due to unexpectedly high deficits, unexpectedly high interest rates, unexpectedly low growth rates and unexpectedly high inflation.
The plot compares the unexpected high deficits with the unexpected high inflation terms for OECD countries, using the common units of their impact on the public debt.
For countries that ran higher unexpected fiscal deficits, inflation was also unexpectedly higher.
Some countries had their stimulus early, others only later. Somer larger, other smaller. Some had more, others less inflation. The accounts of the government let you consistently sum these differences over the 5 years to look beyond timings and to use consistent units. Thinking in terms of surprises and using expectations data allows you to compare countries with very different fiscal trajectories.
More generally, in all models and theories of inflation, including fiscal account, expectations are crucial. Using expectations data to inspect them is very informative.
Note: as with the initial claim, the plot is a correlation, not a causal statement.
Sources:
(i) Section 4 in Reis "Why Did Inflation Rise and Fall in 2021-24? Channels and Evidence from Expectations"
(ii) This simple exercise is inspired on the analysis of Barro and Bianchi “Fiscal Influences on Inflation in OECD Countries, 2020-23.”
Max Miller retweeted
“It’s actually about crime” and then you look and the time periods being romanticized were dramatically less safe
Max Miller retweeted
Alternative proposal: take into account social security systems in the measure of wealth inequality.
Wealth inequality hasn’t increased much when you count accrued social security benefits.
