John H. Cochrane

Senior Fellow
Research Team: 

John H. Cochrane is a senior fellow at the Hoover Institution. He is currently the AQR Capital Management Distinguished Service Professor of Finance at the University of Chicago’s Booth School of Business. He is also a research associate of the National Bureau of Economic Research and an adjunct scholar of the CATO Institute.

Before joining the Booth School in 1994, Cochrane was at the Economics Department of the University of Chicago. Cochrane earned a bachelor’s degree in physics at MIT and his PhD in economics at the University of California at Berkeley. He was a junior staff economist on the Council of Economic Advisers (1982–83).

Cochrane’s recent publications include the book Asset Pricing and articles on dynamics in stock and bond markets, the volatility of exchange rates, the term structure of interest rates, the returns to venture capital, liquidity premiums in stock prices, the relation between stock prices and business cycles, and option pricing when investors can’t perfectly hedge. His monetary economics publications include articles on the relationship between deficits and inflation, the effects of monetary policy, and the fiscal theory of the price level. He has also written articles on macroeconomics, health insurance, time-series econometrics, financial regulation, and other topics. He was a coauthor of The Squam Lake Report.

Cochrane frequently contributes editorial opinion essays to the Wall Street Journal,, and other publications. He maintains the Grumpy Economist blog.

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Recent Commentary

Federal Reserve

Small Shoes And Headroom

by John H. Cochrane via Grumpy Economist
Thursday, May 28, 2015

I talked with Kathleen Hays and Michael McKee on Bloomberg Radio last week, and they asked (twice!) a question that comes up often in thinking about Fed policy: shouldn't the Fed raise rates now, so it has some "headroom" to lower them again if another recession should strike? I could only answer with my standard joke: That's like the theory that you should wear shoes two sizes too small because it feels so good to take them off at the end of the day.

Bank Vault
Featured Commentary

Tucker And Bagehot At Hoover

by John H. Cochrane via Grumpy Economist
Wednesday, May 27, 2015

I had the pleasure last week of attending the conference on Central Bank Governance And Oversight Reform at Hoover, organized by John Taylor. Avoiding the usual academic question of what should the Fed do, and the endless media question will-she-or-won't she raise rates, this conference focused on how central banks should make decisions. Particularly in the context of legislation to constrain the Fed coming from Congress, with financial dirigisme and "macro-prudential" policy an increasing temptation, I found these moments of reflection quite useful.


Bailout Barometer

by John H. Cochrane via Grumpy Economist
Tuesday, May 26, 2015

The Richmond Fed updated its "bailout barometer," at left. Post here and longer report here. (WSJ coverage here) I found the numbers and the table from the longer report interesting as well. Guaranteeing more than half of financial sector liabilities is impressive. But most of us don't know how large financial sector liabilities are. GDP is about $17 Trillion. $43 Trillion is a lot.


Homo Economicus Or Homo Paleas?

by John H. Cochrane via Grumpy Economist
Friday, May 22, 2015

Or at least that's how Google translate renders "straw man." Dick Thaler is in the news, with a long review of his book in the Wall Street Journal  and a thoughtful opinion piece in the New York Times, earning plaudits from Greg Mankiw no less. The pieces are nice reference points to think about just where psychological economics is. Bottom line: People do a lot of nutty things. But when you raise the price of tomatoes, they buy fewer tomatoes, just as if utility maximizers had walked into the grocery store.


Feldstein On Inflation

by John H. Cochrane via Grumpy Economist
Tuesday, May 19, 2015

Martin Feldstein has an interesting Op-Ed in the Wall Street Journal, "Why the U.S. Underestimates Growth." The basic idea is that inflation may be overstated, because it doesn't do a good job of handling new products. As a result, real output growth may be a bit stronger than measured.  Marty runs through a lot of sensible conclusions.


McAndrews On Negative Nominal Rates

by John H. Cochrane via Grumpy Economist
Saturday, May 9, 2015

Many (not all) negative interest rate proposals call for the elimination of currency. Currency is dying anyway due to the great advantages of electronic transactions. I bemoaned the loss of privacy and political freedom when the NSA, the IRS, and pretty soon Twitter and the Chinese Department of Hacking have a record of everything you've ever bought or sold.


Unit Roots In English And Pictures

by John H. Cochrane via Grumpy Economist
Monday, April 27, 2015

The "unit root" is most plausible and verified in the data for log GDP. Recessions and expansions have a lot of transitory component that will come back. But there are permanent movements too. Unemployment, being a ratio, strikes me as one that eventually must come back. But it can take a longer time than we usually think, which is interesting.


Unit Roots, Redux

by John H. Cochrane via Grumpy Economist
Friday, April 24, 2015

Log GDP has both random walk and stationary components. Consumption is a pretty good indicator of the random walk component. This is also what the standard stochastic growth model predicts: a random walk technology shock induces a random walk component in output but there are transitory dynamics around that value.

Featured Commentary

The Right To Herd

by John H. Cochrane via Grumpy Economist
Wednesday, April 22, 2015

Who are these traders who respond to spoofing orders by placing their own orders? Why is it a crucial goal of law and public policy to prevent Mr. Sarao from plucking their pockets?

Keynesians in Retreat

by John H. Cochrane via Hoover Digest
Monday, April 20, 2015

They’ve been too wrong for far too long.


Current Online Courses

Asset Pricing, Part 1, via Coursera and the University of Chicago

This course is part one of a two-part introductory survey of graduate-level academic asset pricing. We will focus on building the intuition and deep understanding of how the theory works, how to use it, and how to connect it to empirical facts. This first part builds the basic theoretical and empirical tools around some classic facts. The second part delves more deeply into applications and empirical evaluation. Learn more. . .