US

Money Market Funds

Question A:

The way in which money market funds normally trade – at one dollar per share, even though the per-share value of the assets backing them varies over time – made them vulnerable to a run in 2008 before they received taxpayer guarantees.

Responses weighted by each expert's confidence

Question B:

Taxpayers would be better protected if each money market fund in the U.S. were instead required to trade at its floating net asset value.

Responses weighted by each expert's confidence

Question C:

In the absence of floating net asset values, taxpayers would be better protected if each money market fund in the U.S. were required to set aside capital to protect against losses while holding back a portion of shareholders' cash for a time when they seek to withdraw all of their money.

Responses weighted by each expert's confidence

Question A Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Agree
4
Bio/Vote History
Alesina
Alberto Alesina
Harvard Did Not Answer Bio/Vote History
Altonji
Joseph Altonji
Yale
Agree
4
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Agree
3
Bio/Vote History
Autor
David Autor
MIT
No Opinion
Bio/Vote History
Baicker
Katherine Baicker
University of Chicago
No Opinion
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
No Opinion
Bio/Vote History
Chetty
Raj Chetty
Harvard
No Opinion
Bio/Vote History
Chevalier
Judith Chevalier
Yale
Agree
8
Bio/Vote History
Currie
Janet Currie
Princeton
Agree
2
Bio/Vote History
Cutler
David Cutler
Harvard
Uncertain
1
Bio/Vote History
Deaton
Angus Deaton
Princeton
No Opinion
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Strongly Agree
10
Bio/Vote History
In 2008, Institutional investors ran, redeeming shares at a dollar each when a risk arose that this might later become impossible.
-see background information here
Edlin
Aaron Edlin
Berkeley Did Not Answer Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Uncertain
5
Bio/Vote History
Fair
Ray Fair
Yale Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale
Agree
6
Bio/Vote History
Goldin
Claudia Goldin
Harvard
No Opinion
Bio/Vote History
Goolsbee
Austan Goolsbee
Chicago
Strongly Agree
10
Bio/Vote History
The run on mmmfs was one of the systemic events that nearly blew up the world in 2008 L
Greenstone
Michael Greenstone
University of Chicago
Agree
4
Bio/Vote History
Hall
Robert Hall
Stanford Did Not Answer Bio/Vote History
Holmström
Bengt Holmström
MIT
Strongly Agree
9
Bio/Vote History
Hoxby
Caroline Hoxby
Stanford
Agree
8
Bio/Vote History
Judd
Kenneth Judd
Stanford
No Opinion
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Strongly Agree
10
Bio/Vote History
The current structure of MMMFs makes them susceptible to runs. So an ugly blow up in Europe could spread to the US via the MMMFs.
-see background information here
-see background information here
Klenow
Pete Klenow
Stanford
Strongly Agree
5
Bio/Vote History
Lazear
Edward Lazear
Stanford Did Not Answer Bio/Vote History
Levin
Jonathan Levin
Stanford
Agree
4
Bio/Vote History
I'm not expert on the institutional details but seems similar to standard demand deposit arrangement (a la diamond-dybvig).
Maskin
Eric Maskin
Harvard
Agree
7
Bio/Vote History
Nordhaus
William Nordhaus
Yale
Strongly Agree
8
Bio/Vote History
Obstfeld
Maurice Obstfeld
Berkeley
Strongly Agree
10
Bio/Vote History
Saez
Emmanuel Saez
Berkeley Did Not Answer Bio/Vote History
Scheinkman
José Scheinkman
Columbia University
Strongly Agree
9
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
No Opinion
Bio/Vote History
Haven't read or thought about these issues.
Shin
Hyun Song Shin
Princeton
Agree
9
Bio/Vote History
Stokey
Nancy Stokey
University of Chicago
Strongly Agree
8
Bio/Vote History
Thaler
Richard Thaler
Chicago Booth
Strongly Agree
7
Bio/Vote History
Udry
Christopher Udry
Northwestern
No Opinion
Bio/Vote History
Zingales
Luigi Zingales
Chicago Booth
Strongly Agree
9
Bio/Vote History

Question B Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Uncertain
4
Bio/Vote History
Alesina
Alberto Alesina
Harvard Did Not Answer Bio/Vote History
Altonji
Joseph Altonji
Yale
Agree
4
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
Agree
3
Bio/Vote History
Autor
David Autor
MIT
No Opinion
Bio/Vote History
Baicker
Katherine Baicker
University of Chicago
No Opinion
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
No Opinion
Bio/Vote History
Chetty
Raj Chetty
Harvard
Agree
4
Bio/Vote History
Chevalier
Judith Chevalier
Yale
Uncertain
9
Bio/Vote History
The alternative is committing not to rescue them, which is difficult.
Currie
Janet Currie
Princeton
Agree
2
Bio/Vote History
Cutler
David Cutler
Harvard
Uncertain
1
Bio/Vote History
Deaton
Angus Deaton
Princeton
No Opinion
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Strongly Agree
10
Bio/Vote History
This would lower the incentive to be the first to run. These runs are destructive.
Edlin
Aaron Edlin
Berkeley Did Not Answer Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Uncertain
5
Bio/Vote History
Fair
Ray Fair
Yale Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale
Agree
6
Bio/Vote History
Goldin
Claudia Goldin
Harvard
No Opinion
Bio/Vote History
Goolsbee
Austan Goolsbee
Chicago
Agree
8
Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago
Agree
8
Bio/Vote History
Hall
Robert Hall
Stanford Did Not Answer Bio/Vote History
Holmström
Bengt Holmström
MIT
Agree
7
Bio/Vote History
Better protected means just that -- smaller chance of a run. Doesn't necessarily mean it is socially desirable.
Hoxby
Caroline Hoxby
Stanford
No Opinion
Bio/Vote History
This is one possible remedy for the problem, but not the only one. It also has some features incompatible with the intended use of MMFs.
Judd
Kenneth Judd
Stanford
No Opinion
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Strongly Agree
7
Bio/Vote History
Floating NAV definitely ends the risk of a run. Only caveat is what happens to the money that MIGHT migrate. Could be a whack a mole issue
Klenow
Pete Klenow
Stanford
Strongly Agree
5
Bio/Vote History
Lazear
Edward Lazear
Stanford Did Not Answer Bio/Vote History
Levin
Jonathan Levin
Stanford
Agree
1
Bio/Vote History
Maskin
Eric Maskin
Harvard
No Opinion
Bio/Vote History
Nordhaus
William Nordhaus
Yale
Agree
7
Bio/Vote History
Obstfeld
Maurice Obstfeld
Berkeley
Strongly Agree
10
Bio/Vote History
Saez
Emmanuel Saez
Berkeley Did Not Answer Bio/Vote History
Scheinkman
José Scheinkman
Columbia University
Strongly Agree
9
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
No Opinion
Bio/Vote History
Shin
Hyun Song Shin
Princeton
Strongly Agree
9
Bio/Vote History
Stokey
Nancy Stokey
University of Chicago
Strongly Agree
7
Bio/Vote History
Money market funds are mutual funds. They should not be allowed to pretend otherwise.
Thaler
Richard Thaler
Chicago Booth
Uncertain
1
Bio/Vote History
Not sure about this policy. Would be very confusing to investors who (wrongly) think of these as bank accounts rather than investments.
Udry
Christopher Udry
Northwestern
No Opinion
Bio/Vote History
Zingales
Luigi Zingales
Chicago Booth
Strongly Agree
7
Bio/Vote History

Question C Participant Responses

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Agree
4
Bio/Vote History
Alesina
Alberto Alesina
Harvard Did Not Answer Bio/Vote History
Altonji
Joseph Altonji
Yale
Agree
3
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
No Opinion
Bio/Vote History
Autor
David Autor
MIT
No Opinion
Bio/Vote History
Baicker
Katherine Baicker
University of Chicago
No Opinion
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
No Opinion
Bio/Vote History
Chetty
Raj Chetty
Harvard
No Opinion
Bio/Vote History
Chevalier
Judith Chevalier
Yale
Uncertain
8
Bio/Vote History
Currie
Janet Currie
Princeton
Agree
5
Bio/Vote History
Cutler
David Cutler
Harvard
Agree
3
Bio/Vote History
Deaton
Angus Deaton
Princeton
No Opinion
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Strongly Agree
10
Bio/Vote History
This would lower run risk, analogous to bank capital requirements as a mitigant of depositor runs.
-see background information here
Edlin
Aaron Edlin
Berkeley Did Not Answer Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Uncertain
5
Bio/Vote History
Fair
Ray Fair
Yale Did Not Answer Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale
Agree
5
Bio/Vote History
Goldin
Claudia Goldin
Harvard
No Opinion
Bio/Vote History
Goolsbee
Austan Goolsbee
Chicago
Agree
8
Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago
Uncertain
1
Bio/Vote History
This sounds correct but I would need to think about it more to have much certainty about it.
Hall
Robert Hall
Stanford Did Not Answer Bio/Vote History
Holmström
Bengt Holmström
MIT
Agree
8
Bio/Vote History
Bigger capital cushions -- relative to the past -- are surely desirable. But the optimal level is unknown.
Hoxby
Caroline Hoxby
Stanford
No Opinion
Bio/Vote History
This is one possible remedy for the problem, but not the only one. It also has some features incompatible with the intended use of MMFs.
Judd
Kenneth Judd
Stanford
Agree
3
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Strongly Agree
7
Bio/Vote History
SEC has a chance to require this and it would help. This probably leads to more migration than floating NAV.
Klenow
Pete Klenow
Stanford
Strongly Agree
5
Bio/Vote History
Lazear
Edward Lazear
Stanford Did Not Answer Bio/Vote History
Levin
Jonathan Levin
Stanford
Agree
3
Bio/Vote History
Maskin
Eric Maskin
Harvard
Agree
7
Bio/Vote History
Nordhaus
William Nordhaus
Yale
Agree
7
Bio/Vote History
Obstfeld
Maurice Obstfeld
Berkeley
Strongly Agree
10
Bio/Vote History
Saez
Emmanuel Saez
Berkeley Did Not Answer Bio/Vote History
Scheinkman
José Scheinkman
Columbia University
Agree
9
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
No Opinion
Bio/Vote History
Shin
Hyun Song Shin
Princeton
Agree
9
Bio/Vote History
Stokey
Nancy Stokey
University of Chicago
Uncertain
5
Bio/Vote History
How much capital would be "enough" in case of a run? When would the waiting period be enforeced? This is a weak policy alternative.
Thaler
Richard Thaler
Chicago Booth
Disagree
3
Bio/Vote History
Seems like this could ENCOURAGE runs.
Udry
Christopher Udry
Northwestern
No Opinion
Bio/Vote History
Zingales
Luigi Zingales
Chicago Booth
Strongly Agree
7
Bio/Vote History