Inflation or Deflation?

Myron Scholes Global Markets Forum

October 28, 2009, 5:30–7 p.m.

John H. Cochrane discussed his research, which uses the money demand equation and the valuation equation of government debt to understand fiscal and monetary policy in 2008–09, and to think about whether the United States is headed for a large fiscal inflation, and what that inflation will look like. He emphasized that inflation can come well before large deficits or monetization are realized.

This event was part of the Initiative on Global Markets and is generously sponsored by Myron Scholes.

Speaker Profiles

John H. Cochrane is the AQR Capital Management Professor of Finance at the University of Chicago Booth School of Business. His recent finance publications include the book Asset Pricing and articles on dynamics in stock and bond markets, the volatility of exchange rates, the term structure of interest rates, the returns to venture capital, liquidity premiums in stock prices, the relation between stock prices and business cycles, and option pricing when investors can’t perfectly hedge. His monetary economics publications include articles on the effects of monetary policy, and on the fiscal theory of the price level. He has also written articles on macroeconomics, health insurance, and other topics.

Cochrane is president-elect of the American Finance Association, a research associate of the National Bureau of Economic Research and past director of its asset pricing program, a fellow of the Econometric Society, and an adjunct scholar of the CATO Institute. He has been an editor of the Journal of Political Economy and associate editor of several journals, including the Journal of Monetary Economics, Journal of Business, and Journal of Economic Dynamics and Control. Recent awards include the TIAA-CREF Institute Paul A. Samuelson Award for his book Asset Pricing, the Chookaszian Endowed Risk Management Prize, and the Faculty Excellence Award for MBA teaching.

Cochrane earned a bachelor’s degree in physics at MIT and his PhD in economics at the University of California at Berkeley. He was in the economics department of the University of Chicago before joining Chicago Booth in 1994, and visited UCLA Anderson School of Management in 2000–01. In addition to research and teaching, Cochrane is a competition sailplane pilot and windsurfer. He lives in Chicago with his wife, Elizabeth Fama, and children, Sally, Eric, Gene, and Lydia.