One of the most puzzling findings in asset pricing is that expected returns dominate variation in the dividend-to-price ratio, leaving little room for dividend growth rates. Even more puzzling is that this dominance only emerged after 1945. We develop a present value model to argue that a general increase in equity duration can explain these findings. As cash flows to investors accrue further into the future, shocks to highly persistent expected returns become relatively more important than shocks to growth rates. We provide supportive empirical evidence from dividend strips, the time-series, and the cross-section of stocks.

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Publication Type
Working Papers
Publication Date
Journal Publisher
Benjamin Golez
Peter Koudijs
(650) 723-1985
The John S. Osterweis Professor of Finance

Arvind Krishnamurthy is John S. Osterweis Professor of Finance at the Stanford Graduate School of Business and a Research Associate at the National Bureau of Economic Research (NBER). He formerly taught at the Kellogg School of Management (1998-2014).

Professor Krishnamurthy studies finance, macroeconomics and monetary policy. He has studied the causes and consequences of liquidity crises in emerging markets and developed economies, and the role of government policy in stabilizing crises. Recently he has been examining the importance of U.S. Treasury bonds and the dollar in the international monetary system. He has published numerous journal articles and received awards for his research, including the Smith Breeden Prize for best paper published in the Journal of Finance, the Western Finance Association Corporate Finance Award, and the Swiss Finance Institute’s Outstanding Paper Award. Professor Krishnamurthy’s research on financial crises and monetary policy has received national media coverage and been cited by central banks around the world. He was formerly an associate editor at the Journal of Finance and the American Economics Journals-Macroeconomics, and is currently associate editor at the American Economic Review. He did his undergraduate studies at the University of Pennsylvania and his doctoral work at the Massachusetts Institute of Technology.

Affiliated faculty of The Europe Center
What determines risk-bearing capacity and the amount of leverage in financial markets? Using unique archival data on collateralized lending, we show that personal experience can affect individual risk-taking and aggregate leverage. When an investor syndicate speculating in Amsterdam in 1772 went bankrupt, many lenders were exposed. In the end, none of them actually lost money. Nonetheless, only those at risk of losing money changed their behavior markedly; they lent with much higher haircuts. The rest continued largely as before. The differential change is remarkable since the distress was public knowledge. Overall leverage in the Amsterdam stock market declined as a result.
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Publication Date
Journal Publisher
American Economic Review
Peter Koudijs
Hans-Joachim Voth

Although each nation in Europe retains its distinct cultural, social and political identity, the region as a whole is among the world’s most economically integrated zones. The open movement of goods, services, capital, people, and pollutants that we observe today was not, however, inevitable; instead, it was contested, challenged, and reversed at many points in the past.


According to the OECD, corporate taxation has steadily fallen since 1994 and today represents around 8.5 per cent of all taxes raised by governments across the globe. The proliferation of tax-efficient structures that route profits to low tax countries in the form of interest payments and royalties has been a big drain on revenues. The European Commission has made several unfruitful attempts to coordinate ‘anti-avoidance’ measures. In a recent effort to crack down on ‘base erosion and profit shifting’ [BEPS] to safeguard the future of corporate tax and curb competition between Member States based aggressive tax rulings, the European Commission has embarked on a ‘fairness’ crusade using antitrust prerogatives. Apple, Starbucks, Amazon, McDonalds and many more others have been accused of benefiting from illegal State aid resulting in orders to pay (back) billions of euros. Are American companies really being targeted by the European Commission? How will corporate taxation in the European Union evolve from here?

Photo of Jacques Derenne (Sheppard, Mullin, Richter & Hampton LLP, Brussels)

Jacques Derenne is the head of the EU Competition & Regulatory practice at Sheppard Mullin’s Brussels office.  He has over 28 years of competition law experience in all areas (mergers, cartels, abuses of dominance and State aid), in EU regulatory and related competition law issues in a variety of regulated industries such as energy, the postal sector, aviation, railways, telecoms, satellites, the audio-visual sector and tobacco products. He regularly appears at competition hearings before the European Commission, and pleads cases before the General Court and the Court of Justice of the EU, national competition authorities, the Belgian and French courts and various regulatory bodies.

Jacques' State aid experience spans more than two decades, during which time he has acted for beneficiaries, competitors and Member States before the European Commission, EU courts and national courts. He co-directed and co-authored studies for the European Commission on the enforcement of State aid rules at the national level (2006 and 2009), which contributed to the Commission's Recovery and Enforcement Notices in 2007 and 2009 respectively. He co-edited a book on the Enforcement of EU State aid law at national level - 2010 - Reports from the 27 Member States (Lexxion, October 2010), and has written quarterly comments on State aid case law and the Commission’s decisional practice in the journal Concurrences since 2004 (together with EU officials).

Jacques also publishes widely on various other EU constitutional, competition and regulatory issues.  He is a founding member of the Global Competition Law Centre (College of Europe, Scientific Council and Executive Committee). He graduated from the University of Liège (Belgium, 1987) and from the College of Europe (Bruges, 1988), and teaches competition law (State aid aspects) at the University of Liège and at the Brussels School of Competition.

Photo of Yaniss Aiche (Sheppard, Mullin, Richter & Hampton LLP, Brussels)

Yaniss Aiche is a Counsel in the EU Competition and Regulatory Practice in Brussels. His practice focuses on the intersection between public policy, government affairs and legal advocacy. He brings corporations, financial institutions, non-profit organizations and government bodies an integrated strategic insight that combines a deep legal, political and business expertise to help them with policy risk assessments and compliance, monitor relevant policy developments and effectively advocate their interests towards key EU institutions and EMEA governments.

Yaniss has over 15 years of experience in EU Policy, international trade and strategic business development. Yaniss started his career in 2000 in Brussels as an expert advisor on international trade and trade negotiations within the WTO's Doha Development Agenda where he advised governments, corporations and trade associations on a range of intricate political and legal challenges including investment promotion, cultural services and goods, defense contracting an free trade. In 2007, Yaniss joined AHEL, the consulting arm of The International Institute for Strategic Studies in London where he focused on advising F500 companies at executive and board level on geopolitical and military risk, investment policy development. In this role he supported the business expansion of European and US companies in the Far and Near East.

In more recent years Yaniss has worked in senior positions for leading global law firms assisting them with their regional expansion, client development strategies and legal services packaging.

Yaniss holds a JD from the University of Gent, a Masters from UC Berkeley and an MBA from Chicago Booth.

Jacques Derenne Partner, Head of EU Competition & Regulatory Speaker Sheppard, Mullin, Richter & Hampton LLP, Brussels
Yaniss Aiche Counsel EU Policy and EMEA Government Affairs Speaker Sheppard, Mullin, Richter & Hampton LLP, Brussels
Panel Discussions

Room N349, Neukom Building
Stanford Law School
Stanford, CA  94305

(650) 723-0146 (650) 725-0253
Judge John W. Ford Professor of Dispute Resolution
Professor of Law

Deborah R. Hensler is the Judge John W. Ford Professor of Dispute Resolution and Associate Dean for Graduate Studies Emerita at Stanford Law School, where she teaches courses on complex and transnational litigation, the legal profession, and empirical research methods. She co-founded the Law and Policy Laboratory at the law school with Prof. Paul Brest (emeritus). She is a member of the RAND Institute Civil Justice Board of Overseers and the Berkeley Law Civil Justice Initiative Advisory Board. From 2000-2005 she was the director of the Stanford Center on Conflict and Negotiation.

Prof. Hensler has written extensively on mass claims and class actions and is the lead author of Class Actions in Context: How Economics, Politics and Culture Shape Collective Litigation (2016) and Class Action Dilemmas: Pursuing Public Goals for Private Gain (2000) and the co-editor of The Globalization of Class Actions (2009). Prof. Hensler has taught classes on comparative class actions and empirical research methods at the University of Melbourne (Australia) and Catolica Universidade (Lisboa) and held a personal chair in Empirical Legal Studies on Mass Claims at Tilburg University (Netherlands) from 2011-2017. In 2014 she was awarded an honorary doctorate in law by Leuphana University (Germany). Prior to joining the Stanford faculty, Prof. Hensler was Director of the RAND Institute for Civil Justice (ICJ). She is a member of the American Academy of Arts & Sciences and the American Academy of Political and Social Sciences. Prof. Hensler received her A.B. in political science summa cum laude from Hunter College and her Ph.D. in political science from the Massachusetts Institute of Technology.

Affiliated faculty at The Europe Center
Associate Dean for Graduate Studies at the Stanford Law School
Director at the Law and Policy Lab

Encina Hall
616 Serra Street
Stanford, CA  94305-6165

Visiting Scholar at The Europe Center, 2014-2015

Irmgard Marboe is a visiting scholar at The Europe Center and an Associate Professor of International Law in the Department of European, International and Comparative Law, Faculty of Law at the University of Vienna. She is the head of the Austrian National Point of Contact for Space Law (NPOC) of the European Centre for Space Law (ECSL). Between 2008 and 2012, she was the chair of the working group on national space legislation of the Legal Subcommittee of the UN Committee for the Peaceful Uses of Outer Space which drafted the most recent UN General Assembly resolution relating to outer space activities (Res 68/74 of 11 December 2013).

Another research focus is international investment law where Professor Marboe specializes on the issue of compensation and damages. A second edition of her book Calculation of Compensation and Damages in International Investment Law (Oxford University Press, 2009) is currently in preparation. In addition, she works on Islamic law in the context of international law. She has been the director of the bi-annual Vienna International Christian-Islamic Summer University ( since 2008.

While at Stanford, Professor Marboe will work on a research project comparing US and European policies and legislation on data collected by Earth observation satellites.

News Type

Special Event:  Pascal Lamy Lecture

“World Trade and Global Governance”

The Europe Center invites you to a special lecture by Pascal Lamy, the former Director-General of the World Trade Organization.
Image of Pascal Lamy
Date: February 10, 2014 
Time: 4:00 - 5:30 p.m.
Venue: Bechtel Conference Center, Encina Hall
RSVP by February 5, 2014                       
Mr. Lamy will speak on the necessary mix of economic, social, and political policies that will determine the efficacy of free trade as an engine of global economic growth. In particular, he will outline a statement of his own thinking about the future of global governance and international trade, and describe what remains to be done in addressing the challenges of globalization. Additionally, Mr. Lamy will reflect on the features of modern politics that create governance gridlock and thwart global oversight, and will identify how progress can be made in overcoming impediments to policy action at the international level. 
My Lamy served as the Director-General of the World Trade Organization from 2005-2013. He is currently the Honorary President of the Paris-based think tank, Notre Europe.

Meet our Visiting Scholars:  Bjørn Høyland 

In each newsletter, The Europe Center would like to introduce you to a visiting scholar or collaborator at the Center. We welcome you to visit the Center and get to know our guests.
Image of Bjorn Hoyland
n Høyland (PhD, London School of Economics, 2005) is Professor of Political Science at the University of Oslo, Norway. He is currently visiting Professor and Anna Lindh Fellow at The Europe Center, Freeman Spogli Institute for International Studies and Stanford Global. The focus of his research is European Union politics and comparative legislative politics. Professor Høyland’s list of journal publications includes the American Political Science Review, Annual Review of Political Science, British Journal of Political Science, and European Union Politics. His textbook (with Simon Hix) The Political System of the European Union (3rd ed) is the standard text for advanced courses on the European Union.

Workshop Schedules  

The Europe Center invites you to attend the talks of speakers in the following workshop series: 

Europe and the Global Economy

January 23, 2014
David Dreyer Lassen, Professor of Economics, University of Copenhagen
RSVP by Jan 20, 2014 
February 20, 2014
Alan Deardorff, John W. Sweetland Professor of International Economics & Prof. of Economics and Public Policy, University of Michigan
RSVP by Feb 17, 2014
Mar 6, 2014
Sophie Meunier, Research Scholar, Woodrow Wilson School and Co-Director, EU Program at Princeton, Princeton University
RSVP by Mar 3, 2014
Mar 13, 2014
Randy Stone, Professor of Political Science, University of Rochester
RSVP by Mar 10, 2014
Apr 3, 2014
Kåre Vernby, Associate Professor, Department of Government, Uppsala University
RSVP by Mar 31, 2014
Apr 17, 2014
Mark Hallerberg, Professor of Public Management and Political Economy, Hertie School of Governance 
RSVP by Apr 4, 2014
May 15, 2014
Christina Davis, Prof. of Politics and International Affairs, Princeton University
RSVP by May 12, 2014

European Governance

February 6, 2014
Matthew Gabel, Professor of Political Science, Washington University at St. Louis
RSVP by Feb 3, 2014
May 22, 2014
Wolfgang Ischinger, Former German Ambassador to the U.S.; Chairman, Munich Security Conference
RSVP by May 19, 2014
May 29, 2014
Simon Hug, Professor of Political Science, University of Geneva
RSVP by May 26, 2014

Other Events

The Europe Center also invites you to attend the following events of interest:
January 27, 2014
Vassil Terziev, Co-founder & CEO, Telerik (BG); and Japec Jakopin, Co-founder & CEO, Seaway (SI)
“Worldclass Enterprise Software and Design Firms in SouthEast and Balkans Europe” 
Sponsor: European Entrepreneurship & Innovation Thought Leaders Seminar
January 30, 2014
Ken Schultz, Professor of Political Science, Stanford University
“Making and Breaking Territorial Agreements: Explaining European Exceptionalism”
Sponsor: CISAC Social Science Seminar; co-sponsored by The Europe Center
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This seminar is part of the "Europe and the Global Economy" series.

How do geopolitical forces influence international capital markets? In particular, do market actors condition their responses to crisis lending initiatives on the political incentives of major lenders? In this paper, Randall Stone and co-writers Terrence Chapman, Songying Fang and Xin Li  analyze a formal model which demonstrates that the effect of crisis lending announcements on international investment flows is conditional on how market actors interpret the political and economic motivations behind lending decisions on the part of the lender and borrower. If investors believe the decision to accept crisis lending is a sign of economic weakness and lending decisions are influenced by the political interests of the major donor countries, then crisis lending may not reduce borrowing costs or quell fears of international investors. On the other hand, if market actors believe that crisis lending programs, and attendant austerity conditions, will significantly reduce the risk of a financial crisis, they may respond with increased private investment, creating a "catalytic effect."  In this model, the political biases of key lending countries can affect the inferences market actors draw, because some sovereign lenders have strategic interests in ensuring that certain borrowing countries do not collapse under the strain of economic crisis. Although this theory applies to multiple types of crisis lending, it helps explain discrepant empirical findings about market reactions to IMF programs. The implications of their theory is tested by examining how sovereign bond yields are affected by IMF program announcements, loan size, the scope of conditions attached to loans, and measures of the geopolitical interests of the United States, a key IMF principal.

Randall Stone (Ph.D. 1993, Harvard) is Professor of Political Science at the University of Rochester.  His research is in international political economy and combines formal theory, quantitative methods, and qualitative fieldwork.  He is the author of Controlling Institutions:  International Organizations and the Global Economy (Cambridge University Press 2011), Lending Credibility:  The International Monetary Fund and the Post-Communist Transition (Princeton University Press, 2002) and Satellites and Commissars:  Strategy and Conflict in the Politics of Soviet-Bloc Trade  (Princeton University Press, 1996), as well as articles in the American Political Science Review, International Organization, International Studies Quarterly, the Journal of Conflict Resolution, Review of International Organizations, and Global Environmental Politics.  He has been awarded grants by the NSF, SSRC, NCEEER, and IREX, was the last recipient of the Soviet Peace Prize (1991), and has been a Senior Fulbright Scholar visiting the Stiftung Wissenschaft und Politik in Berlin.  He speaks German and Russian fluently and Polish moderately well, and reads all Slavic languages. 

CISAC Conference Room

Randy Stone Professor of Political Science; Director of the Skalny Center for Polish and Central European Studies and of the Peter D. Watson Center for Conflict and Cooperation Speaker the University of Rochester

Encina Hall
616 Serra Street
Stanford, CA 94305

(650) 497-9790
Senior Fellow at the Freeman Spogli Institute for International Studies
Professor of Political Science

Kenneth Scheve is Professor of Political Science at Stanford University, a Senior Fellow at Stanford’s Freeman Spogli Institute and a former director of The Europe Center. His research interests are in the fields of international and comparative political economy and comparative political behavior with particular interest in the behavioral foundations of the politics of economic policymaking. His research has been published in numerous leading scholarly journals and has been recognized for a number of awards and grants including the Michael Wallerstein Award, the Franklin L. Burdette/Pi Sigma Alpha Award, the David A. Lake Award, and Robert O. Keohane Award.

Scheve is the author, with David Stasavage, of Taxing the Rich: A History of Fiscal Fairness in the United States and Europe which examines the role of fairness concerns in the politics of progressive taxation from the early 19th century through contemporary debates. Scheve is also the author, with Matthew Slaughter, of Globalization and the Perceptions of American Workers, examining American public opinion about the liberalization of trade, immigration, and foreign direct investment policies. His current research projects examine how people and places adjust to large-scale economic change. This research includes comparative studies examining opinion formation about tax policy, trade policy, local development policy, and international environmental cooperation as well as work on the political origins of changes in wealth inequality in the 19th and 20th century.

Scheve received his PhD from Harvard University and his BA from the University of Notre Dame. He has been a visiting scholar at the Bank of England, London School of Economics, and the Center for Advanced Study in the Behavioral Sciences. Before joining the Stanford faculty in 2012, he taught at the University of Michigan and at Yale University.

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