Konrad Adler
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Prof. Ph.D.
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Adler
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Konrad
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konrad.adler@unisg.ch

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  • Publication
    Thousands of BEERs: Take your pick
    ( 2017-11-01)
    Konrad Adler
    ;
    Christian Grisse
    This paper explores the robustness of behavioral equilibrium exchange rate (BEER) models. We highlight the importance of model uncertainty, and employ real exchange rates computed from price-level data to explore robustness to the inclusion of country fixed effects. The estimated coefficients—and therefore also the implied equilibrium values—are sensitive to the combination of variables included in the model, and to the inclusion of fixed effects. We identify several variables that exhibit a robust link with real exchange rates across specifications. Our findings can help policymakers in understanding the uncertainty associated with estimates of equilibrium exchange rates.
    Type: journal article
    Journal: Review of International Economics
    Volume: 25
    Issue: 5
    URL: https://onlinelibrary.wiley.com/doi/full/10.1111/roie.12296
    DOI: 10.1111/roie.12296
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/118035
    Scopus© Citations 12
  • Publication
    When do common owners soften competition? The role of agency frictions and repeated interaction
    ( 2023-07-26)
    Konrad Adler
    ;
    Yuliyan Mitkov
    We document novel stylized facts about the effects of overlapping ownership on profits. We find that overlapping ownership is associated with lower profit margins when corporate governance is bad and in industries prone to softer competition due to tacit collusion. We build a simple dynamic model, where - due to agency frictions - firm managers derive a private benefit from deviating from tacit collusion. We find that overlapping ownership can increase, decrease, or have no effect on profits, depending on the extent of the agency friction and an industry’s disposition towards softer competition. Our model is consistent with the stylized facts and can help reconcile theory with the mixed effects of overlapping ownership on profit found in the data.
    Type: working paper
    URL: https://drive.google.com/file/d/14S7aLXEMP4q7qPd5T6J5Q2rd7Nt-fKtv/view
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/118030
  • Publication
    Financial Covenants, Firm Financing, and Investment
    ( 2022-08-01)
    Konrad Adler
    Firms reduce investment to avoid costly violations of financial covenants, most of which are based on earnings. Empirically, I show that a 25% drop in earnings implies a 15% decrease in investment for the median listed US firm due to the reduced distance to the covenant threshold. To quantify this precautionary effect of covenants in the aggregate, I incorporate earnings covenants into a heterogeneous firm model with a financial sector. In the model, covenants reduce aggregate investment by 14% relative to a benchmark economy without limits on borrowing, where the precautionary effect of covenants accounts for most of the decrease.
    Type: working paper
    URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3728683
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/118031
  • Publication
    Globalization and Taste Heterogeneity: Evidence from Hollywood
    ( 2022-10-01)
    Simon Fuchs
    ;
    Konrad Adler
    Linder (1961) conjectured that taste differences could impede trade flows. We extend Krugman (1980) to allow for producers that face taste heterogeneity with volatile demand. Consumers are characterized by different taste over product attributes and idiosyncratic risk. Firms face a portfolio type of problem where they trade off supplying the largest consumer groups against higher exposure to group-specific risk. We develop an empirical strategy to estimate consumer taste from observed market shares across multiple distinct markets of the same product, as well as the key parameters that pin down the firm’s portfolio choice problem. We apply our framework to estimate the impact of the rise of China on the global movies market and characterize the heterogeneous welfare effects across countries.
    Type: working paper
    Journal: Atlanta Fed Working Paper Series
    URL: https://www.atlantafed.org/-/media/documents/research/publications/wp/2022/10/06/14--globalization-and-heterogeneity--evidence-from-hollywood.pdf
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/118032
  • Publication
    Dealing with bank distress: Insights from a comprehensive database
    ( 2020-12-01)
    Konrad Adler
    ;
    Frédéric Boissay
    We study the effectiveness of policy tools that deal with bank distress (i.e. central bank lending, asset purchases, bank liability guarantees, impaired asset segregation schemes). We present and draw on a novel database that tracks the use of such tools in 29 countries between 1980 and 2016. To keep “all else” equal, we test whether different policies explain differences in how countries fared through bank distress episodes that feature observationally similar initial macro–financial vulnerabilities. We find that, altogether, policy interventions help restore GDP growth and normalize the economy when bank distress follows a period of high cross–border exposures. Central bank lending and asset purchase schemes are especially effective in the first and second years of distress, respectively, and when bank distress follows low asset valuations, high bank leverage and weak bank performance. Overall, our results suggest that swift and broad–ranging policies can mitigate the adverse economic effects of bank distress.
    Type: working paper
    Journal: BIS Working Papers
    URL: https://www.bis.org/publ/work909.pdf
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/118034
  • Publication
    Innovation and Corporate Cash Holding in the Era of Globalization
    ( 2018-12-01)
    Konrad Adler
    ;
    Mai Chi Dao
    ;
    Jaebin Ahn
    We document a broad-based trend in rising cash holdings of firms across major industrialized countries over the last two decades, a trend that is most pronounced for firms engaged strongly in R&D activities. Our contributions to the literature are twofold. First, we develop a simple model that brings together the insights from modern trade theory (Melitz, 2003) with those of contract theory in corporate finance (Holmström and Tirole, 1998) to show that increased openness to trade can result in rising returns to innovation and in turn greater demand for cash as firms insure against innovation-induced liquidity risk. Second, we derive sharp empirical predictions and find supporting evidence for them using firm-level data across major G7 countries during 1995-2014, a period that saw an unprecedented rise in globalization and business innovation.
    Type: working paper
    Journal: IMF Working Paper
    URL: https://www.imf.org/-/media/Files/Publications/WP/2019/wp1917.ashx
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/118033
  • Publication
    Are Markets Moved by Bad News? Evidence from International Aviation Accidents
    ( 2012-06-01)
    Konrad Adler
    ;
    Steve Lawford
    We investigate the impact of aviation accidents on stock index returns. We find that the strong and significant negative impact of accidents on NYSE index returns found by Kaplanski and Levy (2010) becomes much weaker when we control for just a few extreme accidents. These unusually high-impact events generally involve acts of terrorism, such as 9/11, or otherwise coincide with major economic events that were unrelated to the accidents. Our results cast doubt on event studies which suggest that investor mood alone can cause stock markets to suffer large losses. We create three new datasets for aviation accidents, from two different sources, which we link to stock market data. To identify extreme accidents and terrorist incidents, we construct several measures of media coverage, based on the New York Times online archive. We find a significant impact of all severe aviation accidents on NYSE index returns, in line with Kaplanski and Levy. However, accidents involving U.S. carriers alone do not have a significant impact. This suggests that news coverage about “close to home” accidents does not in itself influence investor mood. When we extend our analysis to other market indexes (FTSE100, CAC40, NIKKEI225), we find no evidence of an aviation accident effect that is consistent with the mood effect. Information about terrorism, on the other hand, has a very strong impact.
    Type: working paper
    URL: https://drive.google.com/file/d/1MR3gh6ioHhC5EJh5QmJ901ccDDdfX-HC/view?usp=sharing
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/118036