Working Papers
2024
- Information and Market Power in DeFi IntermediationPablo D. Azar, Adrian Casillas, and Maryam FarboodiMay 2024
The decentralized nature of blockchain markets has given rise to a complex and highly heterogeneous market structure, gaining increasing importance as traditional and decentralized finance become more interconnected. This paper introduces the DeFi intermediation chain and provides theoretical and empirical evidence for private infor- mation as a key determinant of intermediation rents. We propose a repeated bargain- ing model that predicts that profit share of Ethereum market participants is positively correlated with their private information, and employ a novel instrumental variable approach to show that a 1% increase in the value of intermediaries’ private information leads to a 1.4% increase in their profit share.
2023
- Runs and Flights to Safety: Are Stablecoins the New Money Market Funds?Kenechukwu Anadu, Pablo D. Azar, Marco Cipriani, and 7 more authorsSep 2023Revised April 2024
Similar to the more traditional money market funds (MMFs), stablecoins aim to provide investors with safe, money-like assets. We investigate similarities and differences between these two investment products. Like MMFs, stablecoins suffer from “flight-to-safety” dynamics: we document net flows from riskier to safer stablecoins on days of crypto-market stress and estimate a discrete “break-the-buck” threshold of $1, below which stablecoin redemptions accelerate. We then focus on two specific stablecoin runs, in 2022 and 2023, showing that the same flight-to-safety dynamics also characterized these episodes. Finally, as flight-to-safety flows occur within MMF families, stablecoin flows tend to happen within blockchains.
2021
- Moore’s Law and Economic GrowthPablo D. AzarMay 2021Revised October 2022
Over the past sixty years, semiconductor sizes have decreased by 50 percent every eighteen months, a trend known as Moore’s Law. Moore’s Law has increased productivity in virtually every industry, both by increasing the computational and storage power of electronic devices, and by allowing the incorporation of electronics into existing products such as vehicles and industrial machinery. In this paper, I examine the physical channel through which Moore’s Law affects GDP growth. A new model incorporates physical constraints on firms’ production functions and allows for new types of spillovers from the physical characteristics of products. I use the model, and a new data set of product weights, to estimate the effect of the electronic miniaturization channel on productivity growth. The results show that between 11.74 and 18.63 percent of productivity growth during 1960 to 2019 can be attributed to physical changes in the size of electronic components. This effect is highest during the 1990s and early 2000s.