Bans on the short selling of financial securities, such as stocks and government bonds, lead to prices that are further, on average, from their fundamental values.
Responses
Responses weighted by each expert's confidence
Participant | University | Vote | Confidence | Bio/Vote History |
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Daron Acemoglu |
MIT | Bio/Vote History | ||
I think this would depend on the type of mispricing. E.g., heterogeneous priors with shortselling can lead to wide swings in prices.
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Alberto Alesina |
Harvard | Did Not Answer | Bio/Vote History | |
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Katherine Baicker |
University of Chicago | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
I would have said strongly, but there may be instances where one could use other securities to synthesize or mimic the short.
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Janet Currie |
Princeton | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
Restricted trade on one side of the market, if binding, by definition prevents matching supply with demand, and thus "fundamental" prices.
-see background information here |
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
Even with short selling, it can be hard to stop a bubble. Without it, well...
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Claudia Goldin |
Harvard | Bio/Vote History | ||
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Austan Goolsbee |
Chicago | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
more impt question is whether shorts produce info that improve firm governance. mandatory disclosure rules raise firm profits & stock price
-see background information here |
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Robert Hall |
Stanford | Bio/Vote History | ||
If short selling is lawful and fraud is not prosecuted, there is a big opportunity to spread fraudulent rumors and gain by shorting.
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Bengt Holmström |
MIT | Bio/Vote History | ||
On average definitely. By the nature of learning processes, not always.
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Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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Kenneth Judd |
Stanford | Did Not Answer | Bio/Vote History | |
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
This desperate policy does not work. See Geanakoplos for the dangers of leverage and the inability to short in producing instability.
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Pete Klenow |
Stanford | Bio/Vote History | ||
Edward Lazear |
Stanford | Bio/Vote History | ||
Most studies that I have seen indicate that banning short selling has no effect on average price, but does lead to higher variance
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Jonathan Levin |
Stanford | Bio/Vote History | ||
Seems logical as a matter of economic theory. As a matter of practice, I don't know the relevant evidence.
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Eric Maskin |
Harvard | Bio/Vote History | ||
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William Nordhaus |
Yale | Bio/Vote History | ||
Subject to the qualification of market corners.
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
I can imagine different scenarios, and I don't believe there is clear-cut empirical evidence.
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Cecilia Rouse |
Princeton | Did Not Answer | Bio/Vote History | |
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Richard Schmalensee |
MIT | Bio/Vote History | ||
If they have any effect, it's got to be in that direction.
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Hyun Song Shin |
Princeton | Bio/Vote History | ||
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James Stock |
Harvard | Bio/Vote History | ||
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Nancy Stokey |
University of Chicago | Bio/Vote History | ||
I've never seen any evidence on this point.
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
If Bob Shiller had succeeded in making it possible to short real estate markets, some of the bubbles might have been abated.
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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Luigi Zingales |
Chicago Booth | Bio/Vote History | ||
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