Question A:
Establishing a sovereign wealth fund to invest in domestic 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:
For the US, establishing a sovereign wealth fund would be substantially better for citizens relative to reducing public debt burdens.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 John Campbell |
Harvard | Bio/Vote History | ||
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There is no shortage of investment capital in private US markets. The best use of government revenues is to pay down the national debt.
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 John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
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With $26 trillion debt, "swf" is a smokescreen. This is debt-financed spending. Norway has oil revenue, invests abroad. That's a swf. US debt-financed spending is already a disaster. CA train, EV chargers,.... Need to clean up permitting and spending not smokescreen of finance.
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 Francesca Cornelli |
Northwestern Kellogg | Bio/Vote History | ||
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 Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
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 Wenxin Du |
HBS | 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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 Janice Eberly |
Northwestern Kellogg | Bio/Vote History | ||
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Various versions of a federal infrastructure bank, for example, have been proposed over the years and were never passed. Even if funded, it is difficult to institutionalize and implement capital allocation based on expected returns to public funds.
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 Eugene Fama |
Chicago Booth | Bio/Vote History | ||
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Most expenditures will go onto politically attractive projects.
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 Xavier Gabaix |
Harvard | Bio/Vote History | ||
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Reduce debt and deficits instead. Citizens don't need the government to invest in publicly traded assets for them
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 Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
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 John Graham |
Duke Fuqua | Bio/Vote History | ||
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 Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
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Where is the money going to come from? Net interest on the Federal debt will be $892 billion in 2024 according to CBO. The 2024 deficit is projected to be $1.9b. Social security trust will run out of funds in 2033. The US is not Norway.
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 Harrison Hong |
Columbia | Bio/Vote History | ||
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 Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
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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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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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 Ralph Koijen |
Chicago Booth | Bio/Vote History | ||
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 Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
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 Andrew Lo |
MIT Sloan | Did Not Answer | Bio/Vote History | |
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 Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
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 Sydney Ludvigson |
NYU | Did Not Answer | Bio/Vote History | |
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 Matteo Maggiori |
Stanford GSB | Bio/Vote History | ||
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Creating positive incentives in those areas would bring substantial benefits. For example via broad subsidies and taxes at sector level. Much less clear implementing this via sovereign wealth fund that buys equities in specific companies is the right policy implementation.
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 Gregor Matvos |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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 Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
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 Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
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Not clear that a SWF for a country without surpluses (trade, budget) would allow government to do anything it couldn't already do without a SWF. Plus a SWF may bring additional governance problems resulting in misallocation.
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 Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
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Countries with sovereign wealth funds do not borrow to fund them, they save to fund them. The US would have to borrow, increasing our high leverage even more. If one wants to subsidize unprofitable industry investments, this is better pursued through tax policy.
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 Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
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Depends on how the fund is structured and financed.
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 Thomas Philippon |
NYU Stern | Bio/Vote History | ||
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 Manju Puri |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
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 Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
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 Paola Sapienza |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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 Amit Seru |
Stanford GSB | Bio/Vote History | ||
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 Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
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 Laura Starks |
UT Austin McCombs | Did Not Answer | Bio/Vote History | |
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 Jeremy Stein |
Harvard | Bio/Vote History | ||
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 Johannes Stroebel |
NYU Stern | Bio/Vote History | ||
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 Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
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 Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
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Have a ROI driven approach to investing in strategic sectors will bring discipline and create long run vision
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 Toni Whited |
UMich Ross School | Bio/Vote History | ||
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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John Campbell |
Harvard | Bio/Vote History | ||
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John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
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The US federal government is not in a good position to run a debt-financed hedge fund, especially if "investments" are made as now mostly to preserve dying industries and rents to political constituencies.
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Francesca Cornelli |
Northwestern Kellogg | Bio/Vote History | ||
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Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
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Wenxin Du |
HBS | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Janice Eberly |
Northwestern Kellogg | Bio/Vote History | ||
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SWFs are typically funded with net public savings from various forms of natural resources. Debt funding raises risk, including further increasing the national debt, when any premium associated with US debt seems to have already dissipated.
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Eugene Fama |
Chicago Booth | Bio/Vote History | ||
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Xavier Gabaix |
Harvard | Bio/Vote History | ||
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Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
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John Graham |
Duke Fuqua | Bio/Vote History | ||
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Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
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The idea is to borrow more (issue treasuries) and then have find skilled managers that can produce returns higher than the borrowing costs. I am skeptical of finding those managers at government pay rates. Further, there would be political interference. Better to pay down debt.
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Harrison Hong |
Columbia | Bio/Vote History | ||
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Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
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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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Ralph Koijen |
Chicago Booth | Bio/Vote History | ||
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Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
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Andrew Lo |
MIT Sloan | Did Not Answer | Bio/Vote History | |
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Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
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Sydney Ludvigson |
NYU | Did Not Answer | Bio/Vote History | |
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Matteo Maggiori |
Stanford GSB | Bio/Vote History | ||
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At lower debt levels (say before the GFC) I would have argued for the US to issue safe debt and buy riskier assets. At present high level of debt, adding more government leverage and risk taking is a far less obvious policy.
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Gregor Matvos |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
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Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
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Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
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If there are large externalities to unprofitable industry investments that make them worth doing, the government can subsidize these. This may increase not pay down US debt, but slowly. And private capital chooses the projects and shares the losses of bad choices with taxpayers.
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Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
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Thomas Philippon |
NYU Stern | Bio/Vote History | ||
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Manju Puri |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
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Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
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Paola Sapienza |
Northwestern Kellogg | Did Not Answer | Bio/Vote History | |
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Amit Seru |
Stanford GSB | Bio/Vote History | ||
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Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
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Laura Starks |
UT Austin McCombs | Did Not Answer | Bio/Vote History | |
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Jeremy Stein |
Harvard | Bio/Vote History | ||
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Johannes Stroebel |
NYU Stern | Bio/Vote History | ||
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Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
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Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
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Presumably the return on the SWF would exceed the cost of debt but very high debt potentially has very high macro costs (risk of loss of dollar preeminent for example)
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Toni Whited |
UMich Ross School | Bio/Vote History | ||
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