John H. Cochrane

Rose-Marie and Jack Anderson Senior Fellow
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Biography: 

John H. Cochrane is the Jack and Rose-Marie Anderson Senior Fellow at the Hoover Institution. He is also a research associate of the National Bureau of Economic Research and an adjunct scholar of the CATO Institute. 

Before joining Hoover, Cochrane was  a Professor of Finance at the University of Chicago’s Booth School of Business, and earlier at its Economics Department. 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. His Asset Pricing PhD class is available online via Coursera. 

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

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Recent Commentary

Featured

Basecoin

by John H. Cochrane via Grumpy Economist
Sunday, April 22, 2018

Cryptocurrencies like bitcoin have to solve two and a half important problems if they are to become currencies: 1) Unstable values 2) High transactions costs 2.5) Anonymity.

Analysis and Commentary

Q Is Better Than You Think

by John H. Cochrane via Grumpy Economist
Thursday, April 19, 2018

This lovely graph comes from "Learning and the Improving Relationship Between Investment and q" by Daniel Andrei, William Mann, and Nathalie Moyen. The careful investment and q measurement make it much better than similar figures I've made for example Figure 4 here. Their paper explores the puzzle, just why did q theory work worse before 1995?

Analysis and Commentary

Buybacks Redux

by John H. Cochrane via Grumpy Economist
Wednesday, April 18, 2018

Two more points occur to me regarding share buybacks. 1)When buybacks increase share prices, and management makes money on that, it's a good thing. The common complaint that buybacks are just a way for managers to enrich themselves is exactly wrong. 2) Maybe it's not so good that banks are buying back shares. 

Analysis and Commentary

Fiscal Theory Of Monetary Policy

by John H. Cochrane via Grumpy Economist
Friday, April 13, 2018

Teaching a PhD class and preparing a few talks led me to a very simple example of an idea, which I'm calling the "fiscal theory of monetary policy." The project is to marry new-Keynesian models, i.e. DSGE models with price stickiness, with the fiscal theory of the price level. The example is simpler than the full analysis with price stickiness in the paper by that title.

Featured

Intellectual Property

by John H. Cochrane via Grumpy Economist
Thursday, April 12, 2018

The China trade argument has boiled down to intellectual property and trade. Roughly it has gone like this: "We need to stop China from selling us all this stuff. Bring the jobs home!" "Uh, right now the jobs problem is that employers can't find workers. Cheap stuff from China is a boon to American consumers. Tariffs like that on steel cost more steel-using jobs than they save." "Hm. Ok, but we have to threaten with tariffs to get China to stop requiring our companies to share intellectual property!"

Featured

Why Not Taxes?

by John H. Cochrane via Grumpy Economist
Tuesday, April 10, 2018

Reaction to the Washington Post oped (blog postpdf) on debt  has been sure and swift. We suspected we might get criticized by Republicans for complaining about how deficits are a problem. 

Featured

Unraveling

by John H. Cochrane via Grumpy Economist
Friday, April 6, 2018

Economists delight in unravelings -- behavioral responses that undo bright ideas. A subsidy for skunks produces cats with white stripes. Two good ones came up this week.

Nobel Prize-winning economist Milton Friedman
Analysis and Commentary

Friedman 1968 At 50

by John H. Cochrane featuring Milton Friedmanvia Grumpy Economist
Tuesday, March 27, 2018

This month marks the 50th anniversary of Milton Friedman's The Role of Monetary Policy, one of the most influential essays in economics ever.  To this day, economics students are well advised to go read this classic article, and carefully. 

Featured

A Debt Crisis Is On The Horizon

by Michael J. Boskin, John H. Cochrane , John F. Cogan, George P. Shultz, John B. Taylorvia The Washington Post
Tuesday, March 27, 2018

We live in a time of extraordinary promise. Breakthroughs in artificial intelligence, 3D manufacturing, medical science and other areas have the potential to dramatically raise living standards in coming decades. But a major obstacle stands squarely in the way of this promise: high and sharply rising government debt.

Featured

Unintended Consequences

by John H. Cochrane via Grumpy Economist
Friday, March 16, 2018

Unintended consequences of well-intentioned policies, unexpected behavioral changes in response to ignored incentives, unusual supply (or demand) responses to demand (or supply) interventions, and clever new pathways for changes to happen are the sorts of mechanisms that make economics fun, and I hope useful to cause-and-effect understanding of human affairs.

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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. . .