Question A:
The Democrats and Republicans have floated the idea of a US sovereign wealth fund. For background, see here and here.
Establishing a domestic sovereign wealth fund to invest in infrastructure, emerging technologies, and/or strategic sectors would bring substantial benefits to the US economy over a ten-year horizon.
Responses
Responses weighted by each expert's confidence
Question B:
The typical advanced economy could substantially boost growth by establishing a sovereign wealth fund to invest in infrastructure, emerging technologies, and/or strategic sectors.
Responses
Responses weighted by each expert's confidence
Question C:
For a typical advanced economy, establishing a sovereign wealth fund would be substantially better for citizens relative to paying down the debt as a use for excess revenue.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Daron Acemoglu |
MIT | Did Not Answer | Bio/Vote History | |
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 Mark Aguiar |
Princeton | 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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 Abhijit Banerjee |
MIT | Did Not Answer | Bio/Vote History | |
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 Dirk Bergemann |
Yale | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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The success of a sovereign wealth fund depends critically on its governance structure.
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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There are certainly potential infrastructure investments with public good characteristics but whether a fund would/could be governed in a way that would maximize such investments is really not clear.
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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It's costs versus benefits. The benefits include improved national security (e.g. economic resilience to geopolitical conflict). The costs could include misallocation of capital caused by rent-seeking behavior interacted with political governance.
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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These are not interesting questions. Building up a sovereign wealth fund requires that the government run a surplus, which is so far removed from reality as to not be interesting.
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 Edward Glaeser |
Harvard | Bio/Vote History | ||
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 Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Evidence on returns to infrastructure, even under current allocation system, are likely high. Not sure about emerging technologies or strategic sectors. Where would the money come from? But more importantly, who would make the spending decisions?
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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The government can already do this. The decisions are inevitably political as well as economic. They would be no less political if undertaken by a sovereign wealth fund. So I don't see what is gained.
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Erik Hurst |
Chicago Booth | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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What is the income for the sovereign wealth fund? This may make sense if there are dividends from the infrastructure "investment" but other than highways I don't know what that would be.
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Very likely to become political and uneconomic.
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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where is the money going to come from and what is the USG's track record in doing most of this?
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 Pete Klenow |
Stanford | Bio/Vote History | ||
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 Jonathan Levin |
Stanford | Bio/Vote History | ||
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 Eric Maskin |
Harvard | Did Not Answer | Bio/Vote History | |
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 William Nordhaus |
Yale | Bio/Vote History | ||
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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 Parag Pathak |
MIT | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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Investing in infrastructure is important, but there is no reason to tie this to a sovereign wealth fund. Investment in the economy's future should be part of ordinary government operations.
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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 Fiona Scott Morton |
Yale | Bio/Vote History | ||
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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 Stefanie Stantcheva |
Harvard | Bio/Vote History | ||
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 James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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 Nancy Stokey |
University of Chicago | Bio/Vote History | ||
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Investing in infrastructure would be a good idea. But why the SWF? Who will pick the portfolio? For the U.S., it sounds like badly thought-out gimmick.
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 Chad Syverson |
Chicago Booth | Bio/Vote History | ||
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Did Not Answer | Bio/Vote History | |
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Mark Aguiar |
Princeton | 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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Abhijit Banerjee |
MIT | Did Not Answer | Bio/Vote History | |
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Dirk Bergemann |
Yale | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Without the right governance structure, investment might be directed for political reasons rather than societal long-run benefits.
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Judith Chevalier |
Yale | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Growth can be boosted by government supported infrastructure, which Congress can pass, case by case without a SWF. A SWF is more flexible (no need for Congress every time), but raises concerns about potentially excessive discretion and inefficiencies, or worse.
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Edward Glaeser |
Harvard | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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is China better off for subsidizing solar panels for the world? the answer is unclear to me..
key issue is who makes the spending/investment decisions.. can this be protected from non-economic considerations?
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Oliver Hart |
Harvard | Bio/Vote History | ||
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Same answer as before
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Erik Hurst |
Chicago Booth | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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This ultimately sounds like industrial policy. Who is going to be in charge of the investments and what is their objective?
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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It varies by country, but most of the advanced countries have poor finances and are running deficits. The same concerns about project selection in the US will be true elsewhere too.
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Did Not Answer | Bio/Vote History | |
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William Nordhaus |
Yale | Bio/Vote History | ||
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Parag Pathak |
MIT | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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Again, investment can substantially increase growth, with or without a sovereign wealth fund.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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It may make sense, for instance, for a small open economy running a surplus from a source that would disappear in the long run (e.g. Norway)
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Fiona Scott Morton |
Yale | Bio/Vote History | ||
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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The only justification I can see is for a country with an enormous but temporary revenue boom (i.e. Norway)
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Stefanie Stantcheva |
Harvard | Bio/Vote History | ||
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James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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Nancy Stokey |
University of Chicago | Bio/Vote History | ||
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Countries that have made good use of SWF's are Chile, Norway and a few others with highly volatile earnings from export raw materials like copper and oil. Few developed countries are in this situation.
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Chad Syverson |
Chicago Booth | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Did Not Answer | Bio/Vote History | |
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Mark Aguiar |
Princeton | 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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Abhijit Banerjee |
MIT | Did Not Answer | Bio/Vote History | |
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Dirk Bergemann |
Yale | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Judith Chevalier |
Yale | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Edward Glaeser |
Harvard | Bio/Vote History | ||
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Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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I'm unaware of compelling evidence in either direction.
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Oliver Hart |
Harvard | Bio/Vote History | ||
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It depends on the size of the debt. Alternatives would be reducing taxes or using the money to fund high value public investments.
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Erik Hurst |
Chicago Booth | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Paying down debt is better than funding some fuzzy industrial policy.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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For a few of the resource rich countries with little debt, maybe this is true, but for most of them retiring the debt would be wise. You could pick and choose particular projects or initiatives to fund without going all the way to SWF (which have so many practical challenges.)
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Did Not Answer | Bio/Vote History | |
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William Nordhaus |
Yale | Bio/Vote History | ||
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Parag Pathak |
MIT | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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Much depends on the financial markets - if interest rates are such that debt service is costless, a wealth fund can make sense. It is less clear that a combination of debt and a wealth fund make sense in general.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Fiona Scott Morton |
Yale | Bio/Vote History | ||
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Stefanie Stantcheva |
Harvard | Bio/Vote History | ||
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James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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Nancy Stokey |
University of Chicago | Bio/Vote History | ||
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The SWF would be a better investment if it had a higher rate of return and little risk.
But choosing the investment portfolio would an additional political football the U.S. doesn't need.
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Chad Syverson |
Chicago Booth | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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