The narrative of the rollercoaster day for cryptocurrency markets centers around the fears of stricter regulation in China (which might want to push its future CBDC). I shamlessy take the opportunity to advertise some of my prior work [1/n] #EconTwitter ft.com/content/c4c29b…
In Borri and Shakhnov (FRL 2019) we look at a similar big shock when China de facto ordered the closing of cryptocurrency exchanges. [2/n]
The shock had a huge effect on the global share of trading volume that took place on Chinese cryptocurrency exchanges: in a matter of months it went from 90% to less than 1% (caveat: part of it could have been wash trading) [3/n]
In the paper, we also document large international spillovers associated with the shock: a) volume moved rapidly to exchanges in other countries (for example, Korea and Japan); b) volume on Chinese p2p exchanges soared (these are harder to regulate) [4/n]
Our main takeaway is that changes in domestic regulation of cryptocurrency markets have strong international spillovers and that investors adapt quickly to the new regulatory environment [5/n]
Our paper is motivated by recent work by @HannoLustig et al. (AER 2019) who found that currency carry trade strategies with T-bonds are different from those with T-bills because local currency term premia offset currency premia 2/n
Results in Lustig et al. (AER 2019) are for advanced economies with no/low default risk and imply that the volatility of the permanent component of investors’ SDF must be equalized across countries 3/n
We focus on Italy -- one of the first country struck by #COVIDー19 -- where the lockdown design offers a source of exogenous variation in the intensity of the lockdown at a granular level 2/n
In the second (economic) lockdown (March 22) the Italian government defined a detailed list of essential economic activities. All other activities were either suspended or allowed to operate only remotely 3/n
I am very happy to share that my paper "Optimal Taxation with Home Ownership and Wealth Inequality" with Pietro Reichlin has been now accepted for publication at the @RevEconDyn [1/n] #EconTwitter
In the paper we consider optimal taxation in a model with wealth-poor and wealth-rich households, where wealth derives from business capital and home ownership, and investigate the consequences of a rising wealth inequality at steady state on these tax rates [2/n]
We find that the optimal tax structure includes some taxation of labor, zero taxation of financial and business capital, and critically a housing wealth tax on the wealth-rich households and a housing subsidy on the wealth-poor households [3/n]
My paper with K. Shakhnov on Regulation spillovers across cryptocurrency markets is now available on FRL at this link authors.elsevier.com/c/1bjLs5VD4Kcw… (with 50 days free access) #EconTwitter [thread 1/n]
In this paper we look at the unprecedented drop in trading volume on the Chinese cryprocurrency market after a significant regulatory change that de facto banned bitcoin in early 2017 in China [thread 2/n]
We find large spillovers of this regulatory shock on other cryptocurrency markets: 1) we observe a large increase in trading volume for bitcoin vs. Korean won, Japanese yen and U.S. dollars; ... [3/n]
1/n A new version of my paper with Kirill Shakhnov on "Cryptomarket Discounts" is now available at: ssrn.com/abstract=31243…#EconTwitter [short thread]
2/n Investors buy #bitcoin on a multitude of exchanges, located in different countries, and against different fiat and cryptocurrencies.
3/n Their distribution is leptokurtic, with negative skewness for fiat pairs, and a standard deviation of 4.5%.
1/ Deaths: 119 deaths today, more than 32K since the beginning of the pandemic according to official estimates. But rate is slowly but constantly approaching zero.
2/ 669 new cases today. Combining this number with deaths and recoveries, the total number of active cases today drops by 1570 units and is currently around 57K. Also the rate of new cases is on stable downward path.