Working Papers
Finance and Macroeconomics
Last updated: March 2026
Economic development is associated with a rise in the ratio of firm credit to GDP. Novel cross-country data on the sectoral distribution of credit reveal that underlying this aggregate trend is a significant reallocation of credit from manufacturing towards the real estate sector. This reallocation substantially outpaces structural change in the real economy, suggesting a role for changing financing constraints. We provide evidence on various drivers of the asymmetric increase in firm credit to the real estate sector: a collateral channel driven by rising real estate prices, increasing reliance on intangible assets outside of real estate, and the removal of government-directed credit policies. We then document that higher manufacturing credit predicts higher long-run growth, but the opposite is true for real estate credit. These results have two implications. First, understanding the linkages between finance and economic growth depends not only on the level but also on the composition of credit. Second, financial deepening in credit markets may play a more important role in spurring growth at lower levels of development.
@misc{dai_muller_verner_2025,
author = {Dai, Paul and M{\"u}ller, Karsten and Verner, Emil},
title = {Unbalanced Financial Deepening},
year = {2025},
howpublished = {\url{https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5079393}}
}
Last updated: September 2025
Using a new dataset on sectoral credit exposures in 115 economies from 1940 to 2014, we provide evidence that corporate debt plays a key role in explaining macroeconomic boom-bust cycles, financial crises, and sluggish recoveries. We find that: (i) corporate debt accounts for two-thirds of aggregate credit expansion and three-quarters of nonperforming loans during downturns; (ii) expansions in corporate debt predict crises, conditional on expansions in household credit; (iii) firm credit growth backed by real estate collateral and cash flows is linked to future crises; (iv) dispersion in firm credit growth predicts crises; and (v) financial crises following booms in corporate debt are associated with slower recoveries.
@techreport{NBERw32225,
title = {Corporate Debt, Boom-Bust Cycles, and Financial Crises},
author = {Ivashina, Victoria and Kalemli-\"Ozcan, \c{S}ebnem and Laeven, Luc and M\"uller, Karsten},
institution = {National Bureau of Economic Research},
type = {Working Paper},
series = {Working Paper Series},
number = {32225},
year = {2024},
month = mar,
doi = {10.3386/w32225},
url = {https://www.nber.org/papers/w32225}
}
Last updated: July 2025
Bank runs are a central concern for financial stability, yet systematic empirical evidence remains scarce. We construct a novel historical dataset of bank runs, covering 184 countries since 1800 by combining narrative evidence from 503 sources with statistical indicators of aggregate deposit contractions. We find that: (i) the unconditional likelihood of a bank run is 1.9%; (ii) systemic runs—those accompanied by aggregate deposit outflows—are associated with output losses of 9% over five years, more than after non-systemic runs or deposit contractions alone; (iii) these losses persist even when banks are well capitalized and there is no evidence of fundamental triggers, banking crises, or widespread bank failures; (iv) central banks and deposit insurance are linked to a lower probability of runs becoming systemic, while liability guarantees coincide with smaller output losses. Our findings highlight a key role of bank liability disruptions in economic fluctuations, over and above solvency issues.
@TechReport{JKMS2024,
author = {Jamilov, Rustam and K\"onig, Tobias and M\"uller, Karsten and Saidi, Farzad},
title = {{Two Centuries of Systemic Bank Runs}},
year = {2024},
month = aug,
institution = {C.E.P.R. Discussion Papers},
type = {CEPR Discussion Papers},
number = {19382},
url = {https://ideas.repec.org/p/cpr/ceprdp/19382.html}
}
Last updated: July 2025
Using a newly-constructed panel dataset of U.S. states from 1863 to 2022 that combines bank balance sheets, real economic activity, and a systematic survey of all major chronologies of U.S. financial crises, we document the following facts: (i) financial crises are followed by a 6% decline in state-level output, (ii) output losses vary substantially across states, (iii) the severity of output losses is predictable with local contractions in deposits or wholesale liabilities, and with the incidence of bank failures, (iv) a composite measure of local financial distress, combining narrative evidence with statistical indicators, predicts state-level output losses of 3%, and (v) the share of states experiencing local financial distress predicts national output beyond a binary crisis indicator. These findings suggest that studies of systemic crises may underestimate the frequency and costs of financial distress.
@article{crises2025,
author = {Hoon, Joseph and Liu, Chang and M\"{u}ller, Karsten and Payne, Jonathan and Zheng, Zhongxi},
title = {The Costs of Financial Crises in the United States},
journal = {Working Paper},
year = {2025},
doi = {10.2139/ssrn.5350262},
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5350262}
}
Last updated: July 2025
Reject and Resubmit, Quarterly Journal of Economics
We construct a novel dataset of 60 macroeconomic time series at the U.S. state level, spanning from the 1863 to the present, based on digitizing and harmonizing 113 historical sources. Equipped with these data, we estimate an annual index of state-level economic activity over nearly 160 years. This index aligns closely with official indicators such as state GDP and unemployment when available. Using this measure of economic activity, we uncover several new facts about state-level business cycles: (1) there is substantial heterogeneity across states in both cyclical dynamics and their underlying drivers; (2) business cycles have become more synchronized since World War II; and (3) downturns have become shorter and recoveries quicker over time.
@article{datapaper2025,
author = {Hoon, Joseph and Liu, Chang and M\"{u}ller, Karsten and Zheng, Zhongxi},
title = {{U.S. State-Level Business Cycles Since the Civil War}},
journal = {Working Paper},
year = {2025},
doi = {10.2139/ssrn.5341356},
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5341356}
}
Last updated: January 2025
The Global Macro Database is an open-source, continuously updated dataset of macroeconomic statistics that unifies and extends existing resources. By harmonizing and integrating data from 32 major contemporary sources—including the IMF, World Bank, and OECD—with historical records from 78 additional datasets, we construct comprehensive annual time series for 46 variables across 243 countries. This database covers global macroeconomic trends from the origins of modern data collection to projected estimates for 2030. Using this extensive database, we study the long-run output losses of financial crises and global temperature shocks, two applications in which historical time series are a crucial input. Our findings show that financial crises are associated with statistically detectable contractions in real GDP for five decades into the future, which are considerably larger than previously estimated. Temperature shocks also predict real GDP contractions up to 30 years ahead, especially in emerging economies.
@techreport{NBERw33714,
title = {The Global Macro Database: A New International Macroeconomic Dataset},
author = {M\"uller, Karsten and Xu, Chenzi and Lehbib, Mohamed and Chen, Ziliang},
institution = {National Bureau of Economic Research},
type = {Working Paper},
series = {Working Paper Series},
number = {33714},
year = {2025},
month = apr,
doi = {10.3386/w33714},
url = {https://www.nber.org/papers/w33714}
}
Last updated: October 2025
Revise and Resubmit, Review of Economic Studies
We study the role of Export Credit Agencies—a key tool of modern industrial policy—on exports, firm investment, and capital misallocation by using the effective shutdown of the US Export-Import Bank (EXIM) from 2015–2019 as a natural experiment. We document three results. First, EXIM has large causal effects: a $1 reduction in EXIM trade financing reduces aggregate US product-level exports by $4.50, and EXIM-dependent firms experience substantial contractions in revenues, investment, and employment. Second, shutting down EXIM increases capital misallocation by disproportionately affecting firms with high marginal revenue product of capital (MRPK) while leaving low-MRPK firms largely unaffected. Third, consistent with frictions in private capital markets distorting capital allocation, we find that the effects are concentrated among financially and contractually constrained firms and destination countries. Our results show that even in advanced economies with developed financial markets, industrial policy can improve capital allocation when it targets identifiable market failures in financing.
@techreport{NBERw32019,
title = {EXIM's Exit: Industrial Policy, Export Credit Agencies, and Capital Allocation},
author = {Matray, Adrien and M\"uller, Karsten and Xu, Chenzi and Kabir, Poorya},
institution = {Working Paper},
year = {2025},
month = oct,
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4687024}
}
Last updated: June 2024
Revise and Resubmit, Journal of Financial and Quantitative Analysis
Using plausibly exogenous variation in regional Twitter adoption in the United States, we show that a 10% increase in social media usage causes a 2.5% rise in stock ownership. Consistent with lowering the costs of acquiring information, Twitter has larger effects in counties with low pre-existing stock market knowledge, improves knowledge about asset returns, and leads to a decline in the number of financial advisors. Social media also boosts interest in volatile "meme stocks" favored by retail investors. Our findings highlight the unique influence of social media on household portfolio decisions, distinct from other modern information technologies.
@TechReport{repec:cpr:ceprdp:18445,
type = {CEPR Discussion Papers},
institution = {C.E.P.R. Discussion Papers},
author = {M\"uller, Karsten and Pan, Yuanyuan and Schwarz, Carlo},
title = {Social Media and Stock Market Participation},
year = {2023},
month = sep,
number = {18445},
url = {https://cepr.org/publications/dp18445}
}
Political Economy
Last updated: February 2026
Social media platforms are often credited with empowering grassroots movements in the pursuit of political freedoms. In this paper, we show how social media can also be exploited by political elites to undermine democratic institutions, using the January 6th, 2021 Capitol insurrection as a case study. We present three main findings. First, by exploiting plausibly exogenous variation in Twitter usage, we document that social media exposure predicts participation in the Capitol attack, donations for anti-democratic causes, beliefs in election fraud, and support for the January 6th rioters. Second, Donald Trump's tweets questioning the election's integrity were followed by spikes in "Stop the Steal" activity on Twitter and pro-Trump donations originating from high Twitter usage counties. Third, the insurrection and Trump's account deletion were followed by a decrease in the public expression of toxic political and "Stop the Steal" messaging by pro-Trump users on Twitter, but had little effect on privately held beliefs about the election outcome and pro-Trump donations.
@techreport{MullerSchwarz2026_SocialMediaVsDemocracy,
author = {M{\"u}ller, Karsten and Schwarz, Carlo and Shen, Zekai},
title = {{Social Media vs. Democracy}: Evidence from the January 6th Insurrection},
year = {2026},
month = feb,
type = {CEPR Discussion Paper},
institution = {CEPR},
number = {21168},
url = {https://cepr.org/publications/dp21168}
}
Last updated: February 2025
Revise and Resubmit, AEJ: Applied Economics
Social media companies are under scrutiny for the prevalence of hateful content on their platforms, but there is little empirical evidence on the consequences of moderating such content. We study the online and offline effects of content moderation on social media using the introduction of Germany's "Network Enforcement Act" (NetzDG), which fines social media platforms for failing to remove hateful posts, as a natural experiment. We show that the NetzDG reshaped social media discourse: posts became less hateful, refugee-related content became less inflammatory, and the use of moderated platforms increased. Notably, the law did not significantly reduce the overall activity of toxic users or alter conversation topics. Offline, the NetzDG caused a 1% reduction in anti-refugee hate crimes for every standard deviation in far-right social media usage. Using a synthetic control approach, we document similar effects on overall hate crimes in Germany. In terms of mechanisms, we provide evidence that the NetzDG decreased hate crimes by reducing collective action rather than changing attitudes toward refugees.
@article{JimenezMuellerSchwarz2023,
title = {{The Online and Offline Effects of Content Moderation: Evidence from Germany's NetzDG}},
author = {Jim\'enez Dur\'an, Rafael and M\"uller, Karsten and Schwarz, Carlo},
year = {2025},
doi = {10.2139/ssrn.4230296},
url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4230296}
}
Peer-Reviewed Publications
2025
Review of Asset Pricing Studies, 15(2), 162–216
An extensive literature studies interactions of stock market anomalies using double-sorted portfolios. But given hundreds of known candidate anomalies, examining selected interactions is subject to a data mining critique. In this paper, we conduct a comprehensive analysis of all possible double-sorted portfolios constructed from 102 underlying anomalies. We find hundreds of statistically significant anomaly interactions, even after accounting for multiple hypothesis testing. An out-of-sample trading strategy that invests in the top backward-looking double-sort strategy generates equal-weighted (value-weighted) monthly average returns of 4% (2.7%) at an annualized Sharpe ratio of 2 (1.38), on par with state-of-the-art anomaly-based machine learning strategies.
@article{MuellerSchmickler2021,
title = {Interacting Anomalies},
author = {M\"uller, Karsten and Schmickler, Simon},
journal = {Review of Asset Pricing Studies},
volume = {15},
number = {2},
pages = {162--216},
year = {2025},
doi = {10.1093/rapstu/raaf001}
}
The Review of Economic Studies, 91(6), 3645–3676
ESRB Ieke van den Burg Prize 2021 · FMA 2021 Best Paper Award
We study the relationship between credit expansions, macroeconomic fluctuations, and financial crises using a novel database on the sectoral distribution of private credit for 117 countries since 1940. We document that, during credit booms, credit flows disproportionately to the non-tradable sector. Credit expansions to the non-tradable sector, in turn, systematically predict subsequent growth slowdowns and financial crises. In contrast, credit expansions to the tradable sector are associated with sustained output and productivity growth without a higher risk of a financial crisis. To understand these patterns, we show that firms in the non-tradable sector tend to be smaller, more reliant on loans secured by real estate, and more likely to default during crises. Our findings are consistent with models in which credit booms to the non-tradable sector are driven by easy financing conditions and amplified by collateral feedbacks, contributing to increased financial fragility and a boom-bust cycle.
@article{MuellerVerner2024,
author = {Karsten M\"uller and Emil Verner},
title = {{Credit Allocation and Macroeconomic Fluctuations}},
journal = {The Review of Economic Studies},
year = {2024},
volume = {91},
number = {6},
pages = {3645--3676},
doi = {10.1093/restud/rdad112}
}
Journal of the European Economic Association, 22(3), 1495–1539
We study how social media affects election outcomes in the United States. We use variation in the number of Twitter users across counties induced by early adopters at the 2007 South by Southwest (SXSW) festival, a key event in Twitter's rise to popularity. We show that this variation is unrelated to observable county characteristics and electoral outcomes before the launch of Twitter. Our results indicate that Twitter lowered the Republican vote share in the 2016 and 2020 presidential elections, but had limited effects on Congressional elections and previous presidential elections. Evidence from survey data, primary elections, and text analysis of millions of tweets suggests that Twitter's relatively liberal content may have persuaded voters with moderate views to vote against Donald Trump.
@article{FujiwaraMuellerSchwarz2024,
author = {Thomas Fujiwara and Karsten M\"uller and Carlo Schwarz},
title = {{The Effect of Social Media on Elections: Evidence from The United States}},
journal = {Journal of the European Economic Association},
year = {2024},
volume = {22},
number = {3},
pages = {1495--1539},
doi = {10.1093/jeea/jvad058}
}
Coverage: La Repubblica
The Leadership Quarterly, 35(3), 101758
This paper studies whether Donald Trump's role as host of the popular TV show "The Apprentice" increased his vote share in the 2016 and 2020 elections. We find a positive correlation between TV ratings of The Apprentice and the county-level Republican vote share, but this correlation vanishes once we control for pre-existing voting and NBC viewership patterns. This null effect is robust to different model specifications, measures of exposure to The Apprentice, and an extensive investigation of heterogeneous effects. Viewership of The Apprentice is also unrelated to Congressional election results and support for Trump in survey data or the Republican primaries.
@article{MuellerSchwarz2024Apprentice,
author = {M\"uller, Karsten and Schwarz, Carlo},
title = {From Apprentice to President? Entertainment TV and US Elections},
journal = {The Leadership Quarterly},
volume = {35},
number = {3},
pages = {101758},
year = {2024},
doi = {10.1016/j.leaqua.2023.101758}
}
American Economic Journal: Economic Policy, 15(4), 295–322
Shortlisted, ESRB Ieke van den Burg Prize 2019
Do politics matter for macroprudential policies? I show that changes in macroprudential regulation exhibit a predictable electoral cycle in the run-up to 221 elections across 58 countries from 2000 through 2014. Policies restricting mortgages and consumer credit are systematically looser before elections, particularly during economic expansions. Consistent with theories of opportunistic political cycles, this pattern is stronger when election outcomes are uncertain, regulators are closely tied to politicians, and institutions are poor. These results suggest that political pressures may limit the ability of regulators to "lean against the wind."
@article{MuellerElectoralCycles,
author = {M\"uller, Karsten},
title = {{Electoral Cycles in Macroprudential Regulation}},
journal = {American Economic Journal: Economic Policy},
year = {2023},
volume = {15},
number = {4},
pages = {295--322},
doi = {10.1257/pol.20200626}
}
American Economic Journal: Applied Economics, 15(3), 270–312
We study whether social media can contribute to hatred against minorities with a focus on Donald Trump's political rise. To establish causality, we construct an instrument for Twitter usage based on the platform's early adopters at the South by Southwest (SXSW) festival in 2007, who were crucial for Twitter's diffusion across US counties. Instrumenting with the home counties of SXSW followers who joined in March 2007, while controlling for the counties of SXSW followers who joined before the festival, we find that a one standard deviation increase in Twitter usage is associated with a 32% larger increase in anti-Muslim hate crimes since the 2016 presidential primaries. Further, Trump's tweets about Islam-related topics predict increases in xenophobic tweets by his followers, cable news attention paid to Muslims, and hate crimes on the following days. These correlations persist in an instrumental variable framework exploiting that Trump is more likely to tweet about Muslims on days he plays golf.
@article{Mueller2019Trump,
title = {From Hashtag to Hate Crime: Twitter and Antiminority Sentiment},
author = {M\"uller, Karsten and Schwarz, Carlo},
journal = {American Economic Journal: Applied Economics},
year = {2023},
volume = {15},
number = {3},
pages = {270--312},
doi = {10.1257/app.20210211}
}
Journal of Financial Economics, 143(2), 824–845
What are the costs of congested court systems? This paper studies the 2005 consumer bankruptcy reform, which caused the largest recorded drop in the caseload of bankruptcy courts in the United States. The reform changed the law for individual debtors but left corporate bankruptcies unaffected. This generates plausibly exogenous variation in firms' exposure to court backlog across bankruptcy districts. Using a difference-in-differences approach, I find that lower court congestion decreases credit spreads and increases loan maturities. Consistent with a shock to credit supply due to higher expected recovery values, less congested courts increase firm leverage but leave default risk unchanged.
@article{MULLER2021,
title = {{Busy Bankruptcy Courts and the Cost of Credit}},
journal = {Journal of Financial Economics},
year = {2022},
volume = {143},
number = {2},
pages = {824--845},
author = {Karsten M\"uller},
doi = {10.1016/j.jfineco.2021.08.010}
}
Coverage: Oxford Business Law Blog
Journal of the European Economic Association, 19(4), 2131–2167
This paper investigates the link between social media and hate crime. We show that antirefugee sentiment on Facebook predicts crimes against refugees in otherwise similar municipalities with higher social media usage. To establish causality, we exploit exogenous variation in the timing of major Facebook and internet outages. Consistent with a role for "echo chambers," we find that right-wing social media posts contain narrower and more loaded content than news reports. Our results suggest that social media can act as a propagation mechanism for violent crimes by enabling the spread of extreme viewpoints.
@article{MuellerSchwarzJEEA2020,
author = {M\"uller, Karsten and Schwarz, Carlo},
title = {{Fanning the Flames of Hate: Social Media and Hate Crime}},
journal = {Journal of the European Economic Association},
volume = {19},
number = {4},
pages = {2131--2167},
year = {2021},
doi = {10.1093/jeea/jvaa045}
}
Coverage: New York Times, The Guardian, The Economist, Financial Times, Bloomberg, Time Magazine, TechCrunch, Politico, and others
Journal of Financial and Quantitative Analysis, 55(4), 1269–1303
How do changes in banking regulation affect the syndicated loan market? Because branch networks and loan syndication both facilitate banks' ability to diversify geographical credit risk, we focus on the Riegle-Neal Interstate Branching and Banking Efficiency Act of 1994. We investigate its staggered state-wise implementation in a triple-difference identification strategy, exploiting the fact that the Act only changed the legal framework for out-of-state commercial banks. We find that branching deregulation decreased syndicated loan issuance but spurred bilateral lending to corporations. This shift is also reflected in interest rate spreads, pointing to a supply-driven substitution effect. Our results suggest that changes to banking regulation can affect not only the amount but also the type of credit in the economy.
@article{keil_mueller_2020,
title = {Bank Branching Deregulation and the Syndicated Loan Market},
volume = {55},
number = {4},
journal = {Journal of Financial and Quantitative Analysis},
publisher = {Cambridge University Press},
author = {Keil, Jan and M\"uller, Karsten},
year = {2020},
pages = {1269--1303},
doi = {10.1017/S0022109019000607}
}
Other Research
Revise and Resubmit, The Stata Journal
This article introduces gmd, a command to access the Global Macroeconomic Database (GMD) introduced by Müller et al. (2025), which is a long-run, open-source, and continuously updated database designed to unify and extend existing macroeconomic sources. The command provides access to the latest release of the GMD, previous vintages, harmonized data from dozens of other providers such as the World Bank, the International Monetary Fund, and Eurostat, and some other utility functions.
@article{LehbibMueller2026_gmd,
author = {Lehbib, Mohamed and M{\"u}ller, Karsten},
title = {{gmd}: The Easy Way to Access the World's Most Comprehensive Macroeconomic Database},
journal = {Working Paper},
year = {2026}
}
The County Business Pattern ("CBP") files contain employment and establishment counts for detailed industry codes covering all counties in the United States. The contribution of this project is to digitize, clean, and prepare the CBP files from 1946–1974. We also apply the methods developed in Eckert, Fort, Schott, and Yang (2020a) to impute missing employment observations in the raw data. We provide three digital data products for public use: (1) the cleaned CBP files for each year, (2) a consolidated panel data set of employment and establishment counts for about 20 industries and all US counties, (3) estimates for suppressed employment counts for each year.
@techreport{NBERw30578,
title = {The Early County Business Pattern Files: 1946-1974},
author = {Eckert, Fabian and Lam, Ka-leung and Mian, Atif R and M\"uller, Karsten and Schwalb, Rafael and Sufi, Amir},
institution = {National Bureau of Economic Research},
type = {Working Paper},
number = {30578},
year = {2022},
month = oct,
doi = {10.3386/w30578},
url = {https://www.nber.org/papers/w30578}
}
In Leveraged: The New Economics of Debt and Financial Fragility, University of Chicago Press (Ed.: Moritz Schularick)
Do financial stability risks originate in the growth of lending to particular sectors? Should financial regulators target individual sectors, such as mortgages, and should such tools vary over time? In this paper, I discuss what recent research can tell us about these questions and discuss some new evidence based on a dataset on sectoral credit for 120 countries from 1940 to 2014, spanning across almost the entirety of modern banking crises.
@incollection{Mueller2022SectoralCreditBooms,
author = {M\"uller, Karsten},
title = {Sectoral Credit Booms and Financial Stability},
booktitle = {Leveraged: The New Economics of Debt and Financial Fragility},
editor = {Schularick, Moritz},
publisher = {University of Chicago Press},
year = {2022},
pages = {270--298},
doi = {10.7208/chicago/9780226816944.003.0012},
url = {https://academic.oup.com/chicago-scholarship-online/book/45918/chapter/404330052}
}