Does Student Loan Forgiveness Have Significant Benefits for the Economy?

Student loans are becoming a major challenge for the United States. An estimated 43 million borrowers owe about $1.6 trillion dollars, meaning a significant fraction of U.S. households is burdened with debt that is not dischargeable in bankruptcy. The problem has taken on increased political and economic significance since the Biden Administration announced a federal student-loan forgiveness program that opponents have criticized as a $400-billion social welfare program for the well-to-do.

In a new paper, we take a novel approach to student loan forgiveness by empirically exploring whether it has important economic benefits that could at least partially offset its … Read more

How Venture Capital Improves the Market Value of Firms that Go Public

It is well established that venture capitalists can improve the product market value — the quality of projects and employees — at the private firms they invest in, either by making the firms more efficient (Chemmanur, Krishnan, and Nandy (2011)) or through monitoring (see, e.g., Gompers (1995) or Lerner (1995)). However, entrepreneurs and investors also talk about venture capitalists helping to create value for the firm in the financial market at the time the firm goes public. The channels through which such value is created, however, are less well-understood. In our new paper, available here, we explore a new … Read more