Sean Myers
PhD Candidate

Stanford University
Department of Economics
579 Jane Stanford Way
Stanford, CA 94305

Curriculum Vitae

Macroeconomics, Finance

Expected Graduation Date:
June, 2020

Thesis Committee:
Monika Piazzesi (co-primary)

Martin Schneider (co-primary)

Hanno Lustig

Joshua Rauh


Public Employee Pensions and Municipal Insolvency [Job Market Paper]
This paper studies how governments manage public employee pensions and insolvency risk. I propose a quantitative model of governments that choose savings and risk by borrowing or saving in defaultable bonds, borrowing in non-defaultable pension benefits, and saving in a pension fund that earns a risk premium. In insolvency, the government can receive transfers from households who may have different preferences for public services and private consumption. Matched to a panel of California cities and a hand-collected record of fiscal emergencies, model governments undersave and take excess risk because transfers insure them against negative shocks. Governments are highly vulnerable to another stock market bust, with a hypothetical bust in 2015 producing twice as many fiscal emergencies as the original 2008-10 bust. Savings requirements that limit spending to essential services plus 0.3% of cash-on-hand increase household welfare by 0.77% of consumption. Requiring that pension funds invest in safer assets decreases household welfare because the lower average return discourages government saving.

Subjective Cash Flow and Discount Rate Expectations [2nd Round R&R Journal of Finance
] (with Ricardo De la O)
Why do stock prices vary? Using survey forecasts, we find that cash flow growth expectations explain most movements in the S&P 500 price-dividend and price-earnings ratios, accounting for at least 93% and 63% of their variation. These expectations comove strongly with price ratios, even when price ratios do not predict future cash flow growth. In comparison, return expectations have low volatility and small comovement with price ratios. Short-term, rather than long-term, expectations account for most price ratio variation. We propose an asset pricing model with beliefs about earnings growth reversal that accurately replicates these cash flow growth expectations and dynamics.

Sovereign Debt, Government Spending Cycles, and Back-loaded Pension Reforms
This paper studies the effect of public pension obligations on a sovereign government's commitment to repaying debt. In the model, the government can renege on its pension promises but suffers a cost from losing the trust of households about future pensions. Large pension promises act as a commitment device for debt because they require the government to have regular access to credit markets. The government's decision to default is driven by its total obligations, not just its debt. Thus, there is a range of pension obligations large enough to act as a commitment device without raising total obligations to the point of default. This otherwise deterministic economy has an endogenous cycle in which periods of high spending and increasing debt are followed by periods of pension reform and debt reduction. The model successfully produces high debt in excess of 100% GDP without default and back-loaded pension cuts that match salient features of recent reforms in six EU nations.

Quantitative Easing, Risk-taking and Inside Money Creation with Heterogeneous Banks (with Monika Piazzesi and Martin Schneider) (in progress)