Joachim Jungherr

Institut d'AnÓlisi Econ˛mica
Campus UAB
08193 Bellaterra (Barcelona)

About me:
I am a Post-doc Researcher at the Institut d'AnÓlisi Econ˛mica (IAE-CSIC) in Barcelona (Spain) and an Affiliated Professor at the Barcelona Graduate School of Economics. I received my PhD from the European University Institute in Florence (Italy). A detailed CV can be found here.


Bank Opacity and Financial Crises

This paper studies a model of endogenous bank opacity. In the model, bank opacity is costly for society because it reduces market discipline and encourages banks to take on too much risk. This is true even in the absence of agency problems between banks and the ultimate bearers of the risk. Banks choose to be inefficiently opaque if the composition of a bank's balance sheet is proprietary information. Strategic behavior reduces transparency and increases the risk of a banking crisis. The model can explain why empirically a higher degree of bank competition leads to increased transparency. Optimal public disclosure requirements may make banks more vulnerable to a run for a given investment policy, but they reduce the risk of a run through an improvement in market discipline. The option of public stress tests is beneficial if the policy maker has access to public information only. This option can be harmful if the policy maker has access to banks' private information.

Capital Structure, Uncertainty, and Macroeconomic Fluctuations

At the outset of the Great Recession, credit spreads and default rates soared on corporate bond markets. At the same time, firms were exposed to a particularly sharp rise in sales and growth volatility, while productivity experienced the sharpest downturn of the post-war era. This paper employs an optimal contract approach to security design and capital structure to show how an increase in firm-level uncertainty can result in a rise of the default rate on corporate bonds together with a drop in firm productivity and output. Key to the analysis is a misalignment of the incentives of firm management and investors. Within a dynamic general equilibrium model, I study the impact of exogenous variations in firm-level uncertainty on real and financial aggregates. Uncertainty shocks of plausible size typically cause a recession featuring a rise in default rates and a deleveraging of the corporate sector. An important driver of the business cycle in this model are fluctuations in the Solow residual which are not caused by technology shocks, but by the time-varying severity of agency problems.


Last updated: February 2016