Publications from the department of finance

Journal of Financial Economics 179 p. 104256-104256 Doi: https://doi.org/10.1016/j.jfineco.2026.104256

European Economic Review 186 Doi: https://doi.org/10.1016/j.euroecorev.2026.105304

We study the causal effect of general education on returns to wealth (k-returns) using a school reform that increased the length of compulsory schooling in Norway in the 1960s. OLS estimates reveal a strong, positive, and statistically significant correlation between education and returns to individual net worth. This effect disappears in IV regressions, implying that general education has no discernible causal effect on individual performance in capital markets, whose heterogeneity largely reflects individual ability and risk tolerance. In contrast, we find that education causes higher returns in the labor market (l-returns). We consider a number of potential explanations for this important asymmetry.

Review of Finance Doi: https://academic.oup.com/rof/advance-article/doi/10.1093/rof/rfaf078/8454844

Handelshøyskolen BI

Journal of Financial Economics 175 p. 1-16 Doi: https://doi.org/10.1016/j.jfineco.2025.104191

Disagreement about macroeconomic fundamentals accounts for only part of the disagreement about future interest rates, creating a ‘‘disagreement correlation’’ puzzle. This puzzle arises because standard equilibrium models with belief differences predict a strong link between asset return disagreement and fundamental disagreement, a link not supported by the data. We address this puzzle by introducing a model where disagreement about future demand for savings—driven by disagreement over the prevalence of patient versus impatient investors in the economy—generates asset return disagreement. Our mechanism produces stochastic yield volatility, time-varying bond risk premia, and an upward-sloping yield curve. Empirically, we construct a proxy for demand disagreement by isolating the component of yield disagreement unrelated to disagreement about macro-fundamentals. This proxy is positively related to yields and their volatilities, and predicts future bond risk premia, consistent with the predictions of our demand disagreement model.