Arvind Krishnamurthy
Arvind Krishnamurthy

Harold L. Stuart Professor of Finance

Print Overview
Arvind Krishnamurthy is Harold Stuart Professor of Finance.

His research involves finance and macroeconomics. He has studied the causes and consequences of liquidity crises in emerging markets. He has also studied liquidity effects in the U.S. Treasury bond market and the MBS market. Currently, he is studying how central bank policy can help stabilize liquidity in financial markets.

Professor Krishnamurthy received his Ph.D. from MIT.

Areas of Expertise
Banking and Financial Institutions
Contract Theory
Emerging Markets
Fixed Income Securities and Markets (Includes: Money Markets, Government Debt and Securities)
Macroeconomics (Includes: Monetary Economics, Federal Reserve, Interest Rates)
Monetary Policy (Monetary Economics, Federal Reserve, Interest Rates)
Money Markets (Interest rates, Yield Curve)
Print Vita
PhD, 1998, Financial Economics, Massachusetts Institute of Technology
BSE, 1990, Electrical Engineering, University of Pennsylvania

Academic Positions
Research Associate, NBER, 2008-present
Harold L. Stuart Professor of Finance, Kellogg School of Management, Northwestern University, 2007-present
Faculty Fellow, Northwestern University, Center for International Economics and Development
Associate Professor of Finance, Kellogg School of Management, Northwestern University, 2005-2007
Visitor, London School of Economics, 2005-2005
Assistant Professor of Finance, Kellogg School of Management, Northwestern University, 1998-2005
Visiting Scholar, International Monetary Fund, 2002-2002

Grants and Awards
Smith Breeden Prize, Journal of Finance
Best Paper in Asset Pricing published in the Journal of Finance in 2008
Western Finance Association Award, Western Finance Association
Best Paper in Corporate FInance at the WFA 2003 meetings
Zanetos Prize, MIT
Thesis Prize at MIT

Editorial Positions
Associate Editor, American Economic Review, 2012-present
Associate Editor, Journal of Finance, 2008-present
Associate Editor, American Economic Journal: Macroeconomics, 2009-2012

Print Research
Research Interests
Liquidity, financial crises, banking and monetary policy, debt markets, international finance

He, Zhiguo and Arvind Krishnamurthy. 2013. Intermediary Asset Pricing. American Economic Review. 103(2): 732-770.
He, Zhiguo and Arvind Krishnamurthy. 2012. A Model of Capital and Crises. Review of Economic Studies. 79(2): 735-777.
Krishnamurthy, Arvind and Annette Vissing-Jorgensen. 2012. The Aggregate Demand for Treasury Debt. Journal of Political Economy. 120(2): 233-267.
Krishnamurthy, Arvind and Annette Vissing-Jorgensen. 2011. The Effects of Quantitative Easing on Long-term Interest Rates. Brookings Papers on Economic Activity.
He, Zhiguo, In Gu Khang and Arvind Krishnamurthy. 2010. Balance Sheet Adjustments in the 2008 Crisis. IMF Economic Review . 58: 118-156.
Krishnamurthy, Arvind. 2010. How Debt Markets Have Malfunctioned in the Crisis . Journal of Economic Persepectives . 24(1): 3-28.
Krishnamurthy, Arvind. 2010. Amplification Mechanisms in Liquidity Crises. American Economic Journal: Macroeconomics. 2(3): 1-30.
Caballero, Ricardo and Arvind Krishnamurthy. 2009. Global Imbalances and Financial Fragility. American Economic Review. 99(2): 584-588.
Caballero, Ricardo and Arvind Krishnamurthy. 2008. Collective Risk Management in a Flight to Quality Episode. Journal of Finance. 63(5): 2195-2236.
Caballero, Ricardo and Arvind Krishnamurthy. 2008. Musical Chairs: A Comment on the Credit Crisis. Banque de France Financial Stability Review. 11(Special Issue on Liquidity): 1-3.
Gabaix, Xavier, Arvind Krishnamurthy and Olivier Vigneron. 2007. Limits of Arbitrage: Theory and Evidence from the Mortgage Backed Securities Market. Journal of Finance. 62(2): 557-595.
Caballero, Ricardo and Arvind Krishnamurthy. 2006. Bubbles and Capital Flow Volatility: Causes and Risk Management. Journal of Monetary Economics. 53(1): 35-53.
Dow, James, Gary Gorton and Arvind Krishnamurthy. 2005. Equilibrium Asset Prices and Investment under Imperfect Corporate Control. American Economic Review. 95(3): 659-681.
Caballero, Ricardo and Arvind Krishnamurthy. 2005. Exchange Rate Volatility and the Credit Channel in Emerging Markets: A Vertical Perspective. International Journal of Central Banking. 1(1): 207-245.
Caballero, Ricardo and Arvind Krishnamurthy. 2004. Smoothing Sudden Stops. Journal of Economic Theory. 119(1): 104-127.
Bond, Philip and Arvind Krishnamurthy. 2004. Regulating Exclusion from Financial Markets. Review of Economic Studies. 71(3): 681-707.
Caballero, Ricardo and Arvind Krishnamurthy. 2003. Excessive Dollar Debt: Financial Development and Underinsurance. Journal of Finance. 58(2): 867-894.
Krishnamurthy, Arvind. 2003. Collateral Constraints and the Amplification Mechanism. Journal of Economic Theory. 111(2): 277-292.
Krishnamurthy, Arvind. 2002. The Bond/Old-Bond Spread. Journal of Financial Economics. 66(2): 463-506.
Caballero, Ricardo and Arvind Krishnamurthy. 2002. A Dual Liquidity Model for Emerging Markets. American Economic Review: Papers and Proceedings. 92(2): 33-37.
Caballero, Ricardo and Arvind Krishnamurthy. 2001. International and Domestic Collateral Constraints in a Model of Emerging Market Crises. Journal of Monetary Economics. 48(3): 513-548.
Working Papers
Krishnamurthy, Arvind, Stefan Nagel and Dmitry Orlov. Forthcoming. Sizing up Repo. Journal of Finance.
Krishnamurthy, Arvind and Annette Vissing-Jorgensen. 2013. Short-term Debt and Financial Crises: What We Can Learn from U.S. Treasury Supply.
He, Zhiguo and Arvind Krishnamurthy. 2012. A Macroeconomic Framework for Quantifying Systemic Risk.
Krishnamurthy, Arvind. 2011. Financial Meltdown: Data Diagnoses.
Caballero, Ricardo and Arvind Krishnamurthy. 2005. Financial System Risk and Flight to Quality.
Caballero, Ricardo and Arvind Krishnamurthy. 2001. International Liquidity Illusion: On the Risks of Sterilization.
Book Chapters
Brunnermeier, Markus, Arvind Krishnamurthy and Gary Gorton. 2012. "Liquidity Mismatch Measurement." In NBER Volume on Systemic Risk and Macro Modeling, edited by Markus K. Brunnermeier and Arvind Krishnamurthy, University of Chicago Press.
Krishnamurthy, Arvind, Markus Brunnermeier and Gary Gorton. 2012. "Risk Topography." In NBER Macroeconomics Annual 2011, edited by Daron Acemoglu and Michael Woodford, vol. 26, 149-176. University of Chicago Press.
Caballero, Ricardo and Arvind Krishnamurthy. 2004. "Inflation Targeting and Sudden Stops." In The Inflation-Targeting Debate, edited by Ben Bernanke and Michael Woodford, 423-446. University of Chicago Press.
Krishnamurthy, Arvind. "Why Bankers Must Bear the Risk of 'Too Safe to Fail' Assets." Financial Times .

Print Teaching
Teaching Interests
Money markets and the Fed, liquidity, macroeconomics, asset pricing
Full-Time / Part-Time MBA
Money Markets and the Fed (FINC-451-0)

This course counts toward the following majors: Analytical Finance, Finance

This course covers financial institutions and financial instruments. In the first half of the course, the linkages between the financial system and the macroeconomy are studied including interest rate determination, the role of the Federal Reserve and the conduct of monetary policy. Particular attention is paid to the banking system, with an eye toward understanding the function and importance of banks. The second half of the course provides an overview of the instruments of the money market: federal funds, commercial paper, treasury bills, etc. Basic valuation and hedging techniques in short-term futures and swaps are also covered.

Corporate Finance (FINC-486-0)
This advanced seminar focuses primarily on the theory of corporate finance. Topics include the Modigliani-Miller invariance theorems; the role of taxes, incentives, asymmetric information and product market competition in the choice of capital structure; optimal security design; and financial intermediation. Students should be familiar with material from FINC-485.

Topics in Finance (FINC-520-0)
Current research in topics such as international finance, empirical finance, capital structure and financial markets are analyzed. The seminar usually requires in-class presentations by students, as well as individual research projects.