Wisconsin School of Business

Dean Corbae

Professor - Finance

Dean Corbae is a professor in the department of Finance, Investment, and Banking at the Wisconsin School of Business. He also holds an appointment in the Economics department at UW.

Before coming to Wisconsin, Corbae was the Sebastian Centennial Professor of Business Administration at the University of Texas at Austin. Corbae has been a visiting professor at the Wharton School of the University of Pennsylvania and Cambridge University, as well as a Visiting Scholar at the Federal Reserve Banks of Chicago, Cleveland, Dallas, Minneapolis, Philadelphia, and St. Louis.

Corbae is a research associate of the National Bureau of Economic Research. His research has been supported by the National Science Foundation and the Gates Foundation through the Consortium on Financial Systems and Poverty. He has held editorial positions at the Journal of Economic Theory and the International Economic Review, among others.

Corbae is the co-author of "An Introduction to Mathematical Analysis for Economic Theory and Econometrics" published by Princeton University Press. His research in macroeconomics and econometrics has been published in Econometrica, the Journal of Political Economy, and others.

His current research projects focus on consumer credit and bankruptcy, foreclosures, and banking industry dynamics.

Corbae earned his B.A. in economics from Colgate University and his Ph.D. from Yale University.
 

Selected Published Journal Articles


Corbae, D., & Marimon, R. (2011). Introduction to Incompleteness and Uncertainty in Economics. Journal of Economic Theory (146), 775-784. doi: 10.1016/j.jet.2011.05.001.
Chen, D., & Corbae, D. (2011). On the Welfare Implications of Restricting Bankruptcy Information.
Article AbstractThe Fair Credit Reporting Act (FCRA) dictates that adverse events such as a Chapter 7 bankruptcy filing must be removed from an individual’s credit record after 10 years. The intent of the law is to provide partial consumption insurance by giving an individual a fresh start. However, the law obviously weakens incentives not to default, which can result in higher interest rates that in turn reduce intertemporal insurance. Because of this tradeoff, it is unclear how long is the optimal length of time that an adverse event remains on an individual’s credit record. In this paper we assess the welfare consequences of varying the length of time that adverse events can be on one’s credit record. We calibrate the model to US data where the exclusion parameter is set to be 10 years on average. Then we run a counterfactual to find the length that maximizes ex-post economywide welfare using a consumption equivalent measure. The model predicts agents prefer to remove the bankruptcy flag after one year, though the gains are small.
Journal of Macroeconomics (33), 4-13. doi: 10.1016/j.jmacro.2011.01.001.
Corbae, D., D'Erasmo, P., & Kuruscu, B. (2009). Politico-Economic Consequences of Rising Wage Inequality". Journal of Monetary Economics (56), 43-61. doi: 10.1016/j.jmoneco.2008.08.012.
Corbae, D., Chatterjee, S., & Rios-Rull, J. (2008). A Finite-Life Private-Information Theory of Unsecured Debt. Journal of Economic Theory (142), 149-177. doi: 10.1016/j.jet.2007.01.018.
Corbae, D., & Duffy, J. (2008). Experiments with Network Formation. Games and Economic Behavior (64), 81-120. doi: 10.1016/j.geb.2007.10.008.
Chatterjee, S., & Corbae, D. (2007). On the Aggregate Welfare Cost of Great Depression Unemployment.
Article AbstractThe potential benefit of policies that eliminate a small likelihood of economic crises is calculated. An economic crisis is defined as an increase in unemployment of the magnitude observed during the Great Depression. For the U.S., the maximum-likelihood estimate of entering a depression is found to be about once every 83 years. The welfare gain from setting this small probability to zero can range between 1 and 7 percent of annual consumption in perpetuity. For most estimates, more than half of these large gains result from a reduction in individual consumption volatility.
Journal of Monetary Economics (54), 1529-1544.
Chatterjee, S., Corbae, D., Nakajima, M., & Rios-Rull, J. (2007). A Quantitative Theory of Unsecured Consumer Credit with Risk of Default.
Article AbstractWe study, theoretically and quantitatively, the general equilibrium of an economy in which households smooth consumption by means of both a riskless asset and unsecured loans with the option to default. The default option resembles a bankruptcy filing under Chapter 7 of the U.S. Bankruptcy Code. Competitive financial intermediaries offer a menu of loan sizes and interest rates wherein each loan makes zero profits. We prove the existence of a steady-state equilibrium and characterize the circumstances under which a household defaults on its loans. We show that our model accounts for the main statistics regarding bankruptcy and unsecured credit while matching key macroeconomic aggregates, and the earnings and wealth distributions. We use this model to address the implications of a recent policy change that introduces a form of “means testing” for households contemplating a Chapter 7 bankruptcy filing. We find that this policy change yields large welfare gains.
Econometrica (75), 1525-1589.
Corbae, D., & Ritter, J. (2004). Decentralized Credit and Monetary Exchange without Public Record Keeping. Journal of Economic Theory (24), 933-951. doi: 10.1007/s00199-003-0418-8.
Corbae, D., Temzelides, T., & Wright, R. (2003). Directed Matching and Monetary Exchange. Econometrica (71), 731-756. doi: 10.1111/1468-0262.00424.
Corbae, D., Neely, C., & Weller, P. (2003). Endogenous Realignments in a Target Zone. Oxford Economic Papers (55), 494-511. doi: 10.1093/oep/55.3.494.
Corbae, D., Temzelides, T., & Wright, R. (2002). Money and Matching. American Economic Review (92), 67-71. doi: 10.1257/000282802320189023.
Corbae, D., Ouliaris, S., & Phillips, P. (2002). Band Spectral Regression with Trending Data. Econometrica (70), 1067-1109. doi: 10.1111/1468-0262.00319.
Corbae, D., & Cooper, R. (2002). Financial Collapse: A Lesson from the Great Depression. Journal of Economic Theory (107), 159-190. doi: 10.1006/jeth.2001.2951.
Corbae, D., & Camera, G. (1999). Money and Price Dispersion. International Economic Review (40), 985-1008. doi: 10.1111/1468-2354.00050.
Corbae, D., & Chatterjee, S. (1996). Money and Finance with Costly Commitment. Journal of Monetary Economics (37), 225-248. doi: 10.1016/S0304-3932(96)90035-5.
Corbae, D., & Chatterjee, S. (1996). Valuation Equlibria with Transaction Costs. American Economic Review (85), 284-290.
Corbae, D., Ouliaris, S., & Phillips, P. (1994). A Reexamination of the Consumption Function Using Frequency Domain Regressions. Empirical Economics (19), 595-609. doi: 10.1007/BF01205817.
Corbae, D. (1993). Relaxing the Cash-In-Advance Constraint at a Fixed Cost: Are Simple Trigger-Target Portfolio Rules Optimal?. Journal of Economic Dynamics and Control (17), 51-64. doi: 10.1016/S0165-1889(06)80004-7.
Corbae, D., Lim, K., & Ouliaris, S. (1992). On Cointegration and Tests of Forward Market Unbiasedness. Review of Economics and Statistics (74), 728-732.
Corbae, D., & Chatterjee, S. (1992). Endogenous Market Participation and the General Equilibrium Value of Money. Journal of Political Economy (100), 615-646.
Corbae, D., & Ouliaris, S. (1990). A Test of Long-run PPP Allowing for Structural Breaks. Economic Record (67), 26-33. doi: 10.1111/j.1475-4932.1990.tb02525.x.
Corbae, D., & Ouliaris, S. (1989). A Random Walk throgh the Gibson Paradox. Journal of Applied Econometrics (4), 295-303. doi: 10.1002/jae.3950040307.
Corbae, D., & Ouliaris, S. (1988). Cointegration and Tests of Purchasing Power Parity. Review of Economics and Statistics (70), 508-511.
Corbae, D., & Ouliaris, S. (1986). Robust Tests for Unit Roots in the Foreign Exchange Market. Economics Letters (22), 375-380. doi: 10.1016/0165-1765(86)90101-1.
Corbae, D., & Ouliaris, S. (1985). The Demand for Money: A Variable Adjustment Model. Economics Letters (18), 197-200. doi: 10.1016/0165-1765(85)90180-6.

Presentations


Booth Business School (University of Chicago) ( 2013 )
Central Bank of Norway ( 2013 )
CSEF-IGIER Symposium on Economics and Institutions ( 2013 )
European Central Bank ( 2013 )
Global Banking Conference at London Business School ( 2013 )
Macro Dynamics at London Business School ( 2013 )
NYU Stern Business School ( 2013 )
Ohio State ( 2013 )
Sciences Po Macro Finance Conference ( 2013 )
UCLA ( 2013 )
University of Minnesota Finance ( 2013 )
USC ( 2013 )
ASSA meetings ( 2012 )
Baumol-Tobin Conference at NYU ( 2012 )
Federal Reserve Bank of Atlanta ( 2012 )
Notre Dame University ( 2012 )
Said Business School (Oxford) ( 2012 )
Boston University ( 2011 )
BU/Boston Fed Conference on Macro-Finance Linkages ( 2011 )
Conference on Consumer Credit at Cambridge University ( 2011 )
Conference on Money and Markets at the University of Toronto ( 2011 )
Econometric Society Summer Meetings ( 2011 )
Federal Reserve Bank of Chicago ( 2011 )
NBER Conference on Space and Time in Macroeconomics ( 2011 )
University of Rochester ( 2011 )
Bank of Canada ( 2010 )
Bank of England ( 2010 )
Cowles Conference On General Equilibrium at Yale ( 2010 )
European University Institute ( 2010 )
Institute for Fiscal Studies (London) ( 2010 )
International Monetary Fund ( 2010 )
MIT ( 2010 )
Oxford University ( 2010 )
Society for Economic Dynamics ( 2010 )
University of Cambridge ( 2010 )
University of Maryland ( 2010 )
University of Toronto ( 2010 )
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Chicago Fed Summer Workshop on Money/Banking/Payments and Finance ( 2009 )
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Carnegie-Rochester Conference ( 2008 )
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Conference on Recent Developments in Money ( 2006 )
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Decentralization Conference ( 2003 )
Recent Developments in Money and Finance ( 2003 )
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Conference on Coordination ( 2002 )
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Undergraduate Courses


Financial Markets, Institution
Course DescriptionAn analysis of the U.S. financial system, its responsiveness to and impact on economic activity and policy, its procedures for assessing and pricing risks on various financial instruments, and its role in the allocation of funds to different sectors in th
(FIN 305 Section 1), Spring 2012. Download Syllabus



Graduate Courses


PhD Corporate Finance (FIN 971), Spring 2013. Download Syllabus

(ECO/FIN 899), Fall 2012.

(ECO/FIN 899), Fall 2011.

(ECO/FIN 899), Fall 2013. Download Syllabus



Learning/Teaching Oriented Publications


Corbae, D., Stinchcombe, M., & Zeman, J. (2009). An Introduction to Mathematical Analysis for Economic Theory and Econometrics.
Corbae, D., & Chatterjee, S. (2008). Great Depression, Monetary and Financial Forces In. The New Palgrave Dictionary of Economics, Second Edition (3), 760-763.
Corbae, D. (2008). Smith, Bruce. The New Palgrave Dictionary of Economics, Second Edition. (7), page # 568.
Corbae, D., Durlauf, S., & Hansen, B. (2006). Econometric Theory and Practice: Frontiers of Analysis and Applied Research.
Corbae, D., & Ouliaris, S. (2006). Extracting Cycles from Nonstationary Data. Economic Theory and Practice: Frontiers of Analysis and Applied Research
Corbae, D. (1993). Comments on Contracting Costs, Inflation and Relative Price Variability. Journal of Money, Credit and Banking (25), 602-608.

Professional Organizations


Markets Group, Human Capital and Economic Opportunity: A Global Working Group, Becker Friedman Institute, University of Chicago


Editorial and Reviewing Activities


Journal of Economic Theory - January 2009 - December 2011
Associate Editor

Economic Inquiry - January 2007 - December 2010
Editor

International Economic Review - January 2004 - December 2007
Associate Editor

Economic Theory - January 2002 - December 2006
Associate Editor

- Since January 0001
Reviewer for Research Proposals


Photograph of Dean Corbae

Dean Corbae

 
Professor | Finance
(608) 265-5032
5284A Grainger Hall