Tianshu Lyu

@agranato42 Congratulations Andrew!!

I'm proud to announce that I have defended my finance dissertation and that this summer I will become an Assistant Professor of Law at the University of Texas at Austin! Most of all, I would like to thank Roberta Romano, whose JD-PhD program in finance changed my career.

Applications are open for the 2026 @MFRProgram Macro Finance Research Program Summer Session for Young Scholars, taking place at the Gleacher Center in downtown Chicago on August 4–7, 2026. Young scholars are encouraged to apply by March 1, 2026. Learn more and apply here: tinyurl.com/35rde2j8 @UChicago #EconTwitter #macroeconomics @BeckerFriedman

The Fed just voted to cut capital regulations for large banks. I favor higher capital regulations in general. But this move is to cut the enhanced supplemental leverage ratio (eSLR) -- a mouthful -- and I am somewhat sympathetic to this. A few thoughts. 1/

First - this is more my area of expertise - it is frankly pretty extreme to claim that theoretical arguments can do anything convincing on this issue. The theoretical channels for government investment to be complementary to private investment are so ample that any argument to the contrary could not possibly stand on its own. More on that at the end. The well-identified empirical evidence lines up against Bryan's view pretty decisively. The strongest quasi‑experimental studies all show that public R&D dollars crowd in private effort. Regression‑discontinuity at NIH paylines finds a US$10 m grant shock yields about three extra corporate patents with no loss of business R&D [1]. Shift‑share instruments linking post‑9/11 defense budgets to industry exposure show every public dollar induces 40‑60 cents of additional private R&D and raises total‑factor productivity [2]. Event‑study evidence from sudden university‑level cuts reverses these gains: publications fall 15 % and VC‑backed start‑ups 30 % [3]. A richer SR&ED tax credit for Canadian SMEs boosts their R&D by 17 % and spills over into patent citations [4]. Scientist‑level NIH lotteries confirm grants lift later publications and citations by roughly a quarter [5]. Across designs and contexts, the sign is always positive and the magnitudes large—directly contradicting claims of systematic crowd‑out. What's wrong with your evidence? Kealey‑type papers err in both identification and theory. Their headline correlations use aggregate time‑series where governments boost subsidies precisely when private investment slumps, creating spurious negative signs [6,7]. Damrich, Kealey & Ricketts merely embed those raw aggregates in a stylised contribution‑good model that assumes knowledge is fully appropriable and ignores spillovers, so any public share mechanically lowers measured productivity [8]. Once exogenous variation is isolated—as in the five studies above—the relationship flips, and the omitted spillovers emerge as large and positive. Descriptive regressions that confound cause and effect cannot overturn the causal evidence that well‑designed public funding unlocks socially valuable, privately under‑supplied innovation. There are SO MANY ways of understanding theoretically why the facts would be like this. Romer’s endogenous‑growth framework treats ideas as non‑rival but only partially excludable, so inventors capture just a slice of their social surplus [10], while Aghion‑Howitt’s creative‑destruction model adds business‑stealing, further depressing private incentives [11]. Jones‑Williams calibrate spillovers, duplication and congestion and still find laissez‑faire R&D at barely a third of the optimum [12]. Grossman‑Helpman’s quality‑ladder model layers cross‑sectoral input‑output spillovers, another benefit absent from Caplan’s crowd‑out narrative [13]. Liang & Mu show that when research lines are complements, decentralized scientists cluster on topics that leave high‑return yet neglected areas that only public funding can unlock [14]. [1] @pierre_azoulay , Graff Zivin, J., Li, D. & Sampat, B. (2019) ‘Public R&D and Private Patenting: Evidence from NIH Funding’, Review of Economic Studies 86(1): 117‑152.| [2] Moretti, E., Steinwender, C. & Van Reenen, J. (2024) ‘The Economic Spillovers of Defence Research’, Review of Economics & Statistics 106(2): 235‑256. [3] Babina, T., He, J., Howell, S. et al. (2023) ‘Cutting the Innovation Engine’, Quarterly Journal of Economics 138(4): 2201‑2260. [4] Agrawal, A., Rosell, C. & Simcoe, T. (2020) ‘Tax Credits and Small‑Firm R&D: Evidence from Canada’, American Economic Journal: Economic Policy 12(3): 1‑30. [5] Jacob, B. & Lefgren, L. (2011) ‘The Impact of Research Funding on Scientific Output’, Journal of Public Economics 95(9‑10): 1168‑1177. [6] Kealey, T. (1996) The Economic Laws of Scientific Research. Springer. [7] Kealey, T. & Ricketts, M. (2014) ‘Modelling Science as a Contribution Good’, Research Policy 43(6): 1014‑1024. [8] Damrich, S., Kealey, T. & Ricketts, M. (2022) ‘Crowding In and Crowding Out within a Contribution‑Good Model of Research’, Research Policy 51(1): 104400. [10] Romer, P. M. (1990) ‘Endogenous Technological Change’, Journal of Political Economy 98(5): S71‑S102. [11] Aghion, P. & Howitt, P. (1992) ‘A Model of Growth through Creative Destruction’, Econometrica 60(2): 323‑351. [12] Jones, C. I. & Williams, J. C. (1998) ‘Measuring the Social Return to R&D’, Quarterly Journal of Economics 113(4): 1119‑1135. [13] Grossman, G. M. & Helpman, E. (1991) ‘Quality Ladders in the Theory of Growth’, Journal of Political Economy 99(3): 433‑449. [14] [9] Liang, J. & Mu, X. (2020) ‘Complementary Information and Learning Traps’, Quarterly Journal of Economics 135(4): 1929‑1984.

Very excited to join @I3Open group as an I3 fellow in 2025! Had a great TWG meeting with many exchanges of ideas. Thank @marxmatt and Bhaven for the opportunity. Looking forward to working on firms' patent-to-product strategies and contributing to open innovation data!

1/12 I’m excited to share my job market paper, “Delay Your Rivals? Vertical Integration in Securitization and Lending Competition” (with @JosDSalas1). In this 🧵, I’ll explain how vertical integration (VI) impacts competition, loan rates, and origination. drive.google.com/file/d/1oeSGNA…

Great experience to present my research with @ZundaWinstonXu at @egsc_wustl 2024! Thank you to the organizers for such a wonderful program. Very rewarding to interact with a diverse audience and get great feedback!

📢Input wanted!📢 "Public Policies for Private Finance" Juanita González-Uribe (LSE) and I are reviewing the literature on government programs to improve firms' access to finance Did we miss any (of your) seminal paper(s)? Let us know via DM (1/2) papers.ssrn.com/sol3/papers.cf…

Very excited to see my first publication on the JFE website! Learnt a lot from awesome coauthors, @jessicasjeffers and Kelly Posenau. We find impact investing funds have lower market beta and similar risk-adjusted performance than comparable private market funds. See a 🧵 below.

Great to present my research with @winstonxu4 at @MFRProgram Summer Session for Young Scholars. Got many great feedback and questions. Thank you @UncertainLars & @MFRProgram for putting together a great program where I connect with top scholars and amazing peers in macro finance!

Applications open! @nberpubs Innovation Research Boot Camp in Cambridge, MA July 12-18. Classes with @pierre_azoulay @Afinetheorem @inaganguli @bfjo @ChadJonesEcon @KRoyMyers @johnvanreenen + me/@calebwatney, as well as keynotes by @william_r_kerr + @davidmwessel.

▶️foundingpatents.com◀️ is now live! joint work w/@startupecon, we retrieve founding year for privately-held + publicly-traded firms in the U.S. that patented 1976-2021. What's new here? 🧵1/

Thanks Arpit! What better time to post about my AI-related JMP, "The Ghost in the Machine: Generating Beliefs with Large Language Models", a 🧵: 🤖🧠🤖🧠🤖🧠🤖

🧵The developments at @OpenAI are fascinating from a corporate governance and welfare economics perspective. In the last few years there's been renewed academic debate about what is (or should be) the purpose of a company: to further public welfare or to maximize profit?

Exciting news! 🎉 Don't miss out on the first Imperial College PhD Econ & Finance conference happening on April 25-26, 2024. Calling all PhD students: submit your paper or extended abstract by January 25, 2024. Find out more here: sites.google.com/view/icbs-phd-…

***The 2023 Macro Finance Society Virtual Summer School,*** Aug 7-11 With Jesus Fernandez-Villaverde (Penn), @CarolinPflueger (Chicago), @rkoijen (Chicago), @motoyogo (Princeton), @StefanoGiglioEc (Yale), @AlexiSavov and @OlivierWang1 (NYU) Sign up now: macrofinancesociety.org/mfs-virtual-su…

$SIVB closure & receivership is going to have a massive impact on the tech ecosystem. SVB was not just a dominant player in tech but were highly integrated in some nontraditional ways. A few things we'll see in the coming days / weeks...

We talk to a fair number of LPs. If we connect the dots, it seems there is a huge explosion coming. Here's how it might unfold:

Do you wish you could take a class with @pierre_azoulay @Afinetheorem @inaganguli @bfjo @ChadJonesEcon @KRoyMyers @johnvanreenen or me? If so, apply to attend the @nberpubs Innovation Research Boot Camp in Cambridge, MA July 14-20! Deadline to apply is Thursday 2-February.

15 years ago my PhD advisor taught me One Weird Trick for editing your own writing. Edit **back to front**, paragraph by paragraph. I still use it and it still surprises me how well it works. When I get my students to do it, it often blows their minds. Try it!