Amir Kermani | Clausen Center

Amir Kermani

Assistant Professor

Department of Economics and Haas School of Business

Amir Kermani holds joint positions as assistant professor at the Haas School of Business and Department of Economics at the University of California Berkeley. His research interests include monetary policy, macroeconomics and housing, market securitization and political economy. Before joining UC Berkeley in 2013, he received his PhD from MIT.

Summary of recent papers

The Value of Trading Relationships in Turbulent Times

Date: June 2016

Coauthors: Marco Di Maggio, Zhaogang Song

Citation: NBER Working Papers, No. 22332

This paper investigates the ways in which the network of relationships between dealers shapes their trading behavior in the corporate bond market. They charge lower spreads to dealers with whom they have the strongest ties, and this effect is all the more pronounced at times of market turmoil. Moreover, highly connected and systemically important dealers exploit their connections at the expense of peripheral dealers as well as clients, charging higher markups than to other core dealers, especially during periods of uncertainty. We show that following the collapse of a flagship dealer in 2008, trading chains lengthened by almost 20 percent and that the increase was even greater for the institutions that had the closest ties with the defaulted dealer. Finally, we find evidence that dealers drastically reduced their inventory during the financial crisis. These results can help inform the debate on the risks posed by the interconnectedness of the financial system, showing how this could be a source of market fragility and illiquidity.


Health spending slowed down in spite of the crisis

Date: June 2016

Coauthors: Marco DiMaggio, Andrew Haughwout, Matthew Mazewski, Maxim Pinkovskiy

Citation: Federal Reserve Bank of New York Staff Report No. 781.

Since the end of the Great Recession, growth in health care spending has declined to historically low levels. There is disagreement over whether this decline was caused by falling incomes during the Great Recession (and therefore is likely to reverse once the recovery is complete) or whether the decline represents a structural change in the health sector (and therefore is more likely to endure). We exploit plausibly exogenous regulatory changes in the mortgage lending market to estimate causal effects of the financial boom and bust cycle on personal income in the health sector in a panel of U.S. counties. We find that counties that were exogenously more exposed to the financial crisis because of the regulatory reforms experienced a greater rise in the size of the health sector over the course of the boom and bust relative to control counties, with the differential persisting through the recovery. We also provide evidence that both the boom and the bust periods of the financial crisis increased mortality in treated counties compared to control counties.

Clausen-Supported Research