Magdalena Rola-Janicka
  • Home
  • Research
  • CV
  • Home
  • Research
  • CV

The Good, the Bad and the Missed Boom​
joint with Enrico Perotti

Some credit booms result in financial crises. While excessive risk taking is a plausible cause, many investors do not anticipate increasing risk. We show that credit booms may be misunderstood as productivity-driven, due to opaque bank assets which disguise risk incentives. Balanced funding relative to productive prospects can sustain prudent lending (good boom), while funding imbalances may induce high risk exposure and boost asset prices (bad boom), or lead to asset under-pricing and insufficient lending (missed boom). Rational agents drawing inference from prices make mistakes that can amplify the effect of funding imbalances and propagate risk.​
The Review of Financial Studies, Volume 35, Issue 11, November 2022, pages 5025-5056

Too Levered for Pigou? Carbon Pricing, Financial Constraints, and Leverage Regulation 
joint with Robin Döttling

We analyze jointly optimal carbon pricing and financial policies under financial constraints and endogenous climate-related transition and physical risks. The socially optimal emissions tax may be above or below a Pigouvian benchmark, depending on whether physical climate risks have a substantial impact on collateral values. We derive necessary conditions for emissions taxes alone to implement a constrained-efficient allocation, and show a cap-and-trade system or green subsidies may dominate emissions taxes because they can be designed to have a less adverse effect on financial constraints. Additionally introducing leverage regulation can be welfare-improving if environmental policies have a direct negative effect on financial constraints. Furthermore, our analysis highlights the positive effect of carbon price hedging markets on equilibrium environmental policies.
My contribution has been prepared under the Lamfalussy Fellowship Programme sponsored by the ECB

The Political Economy of Prudential Regulation

This paper studies the equilibrium level of prudential regulation in a framework with negative borrowing externalities. A debt limit is implemented by a politician appointed through majoritarian elections. As voting allows borrowers to internalize the externality, equilibrium regulation restores constrained efficiency whenever the politician can commit to enforce it universally. Under selective enforcement, a captured regulator may exempt politically connected borrowers from regulation. Depending on the electoral power of the connected borrowers, the outcome may be an either too lax or too strict policy. The analysis deepens the understanding of the role of political economy factors in affecting equilibrium regulation. Additional results highlight the impact of income inequality on the strictness of the policy.
​2020 Best Job Market Paper in Finance Theory


To Be Bribed or Lobbied: Political Control or Regulation
joint with Enrico Perotti and Marcel Vorage

The form of political governance determines the structure of competition among interest groups. A politician choosing direct control of firm entry can be bribed, while regulation based on minimum requirements makes her prone to lobbying. Direct control offers exclusive benefit to the winning group resulting in perfect competition among bribers, so all rents accrue to the politician. Under regulation some agents cannot be excluded from entry, giving their lobby a competitive advantage and allowing them to extract rents at the expense of the politician. If institutional quality is low the politician faces low risk of prosecution and thus prefers being bribed. Unequal distribution of legal power in oligarchic societies may give bargaining power also to bribers, allowing the most powerful individuals to share in political rents.
bribed_or_lobbied_2023.pdf
File Size: 323 kb
File Type: pdf
Download File


Policy publications

On the interaction between different bank liquidity requirements ECB Macroprudential Bulletin October 2019 Issue 9, joint work with Markus Behn and Renzo Corrias

Potencjał innowacyjny gospodarki: uwarunkowania, determinanty, perspektywy (Innovative potential of the economy: conditions, determinants, perspectives); Raport Narodowego Banku Polskiego, 2016, coordinated by Jakub Growiec, Andrzej Sławiński

Guideline note for monitoring and evaluation system for innovation strategies (RIS3) in Poland
 WORLD BANK Note, 2015, joint work with Grzegorz Wolszczak, Monika Matusiak, Marcin Piatkowski ​