Anil Kashyap

Anil K. Kashyap, (born c. 1960) is the Stevens Distinguished Service Professor of Economics and Finance at the University of Chicago's Booth School of Business.

Kashyap's research focuses on price setting, the Japanese economy, monetary policy, financial intermediation and regulation.

As an author, he is held in libraries worldwide.

Kashyap was born in Fremont, California in 1960.

He graduated from Mission San Jose High School in 1978 and attended the University of California at Davis.

He graduated from Davis in 1982 with highest honors, being elected to Phi Beta Kappa in 1981.

He majored in Economics and Statistics.

Kashyap worked as a research assistant at the Federal Reserve Board of Governors from 1982 until 1984.

Kashyap was a graduate student at the Massachusetts Institute of Technology in the Department of Economics from 1984 until 1988 – and completed his PhD in 1989.

He worked as a teaching assistant for Rudiger Dornbusch and Stanley Fischer.

The chair of his dissertation committee was Olivier Blanchard; Fischer and James Poterba were the other advisors.

While at MIT, he was introduced to a number of students with whom he would eventually collaborate, including Ricardo Caballero, Takeo Hoshi, Gary Loveman, Raghuram Rajan, David Scharfstein, Jeremy Stein and David Wilcox.

After finishing graduate school, he returned and worked as a staff economist from 1988 until 1991.

In both spells he worked in the Research and Statistics division in the section of that maintained the staff large scale econometric model.

Kashyap moved to the business school (then the Graduate School of Business, now the Booth School of Business) at Chicago in 1991 and was promoted to Associate Professor (1993) and full Professor (1996), before being appointed as the

Edward Eagle Brown Professor in 2003 (and subsequently becoming the inaugural holder of the Stevens chair in 2020).

While at Booth he has taught MBA courses on Money and Banking, the Japanese Economy, Developing a Business Strategy for Japan, Understanding Central Banks, Analyzing Financial Crises and most recently Advanced Macroeconomics.

He has won the school-wide teaching award voted by the MBA students and the Dean's prize for exceptional service.

Kashyap was one of the founding directors of the Chicago Booth Initiative on Global Markets (IGM).

As part of the IGM activities he helped create the IGM Economic Experts Panel.

This panel includes leading economists from Berkeley, Chicago, Harvard, MIT, Princeton, Stanford and Yale who answer periodic public policy questions.

Others have analyzed the responses to these questions to determine issues on which economists agree with each other.

The public can also answer questions to see which panelists’ opinions are most similar to their own.

Under the auspices of the IGM, he also co-founded the US Monetary Policy Forum.

This conference has become one of the leading conferences regarding monetary policy in the world.

He has served as co-editor of the Journal of Business and the Journal of Political Economy.

His PhD dissertation included one of the first papers to analyze firm-level transactions prices.

Using data from mail order retailers he studied the way prices are set finding that they change about once a year, the size of price change is very irregular for a given item, the last digit of the price influences the probability that the price will change and the same item often will have some periods when the price may be constant for more than a year and at other times may change by only one or two percent.

These findings contradict the predictions of the simplest “menu cost” pricing models that suppose that prices are only changed when the benefit of doing so exceeds a fixed given cost of changing them (because the presence of both small changes and long period of no changes imply that sometime this cost must be small and other times must be larger.) They have subsequently been confirmed in numerous other studies using larger data sets from other time periods and other countries.

His dissertation also included research with Takeo Hoshi and David Scharfstein that was among the first to use the unique institutional features of the Japanese economy to test a number of theories about financial markets.

They observed that groups of firms in Japan that are members of the same keiretsu coordinate some activities, most notably sharing funding from a group bank implying that the banking relationships within these groups help overcome problems that are present in more arms-length funding arrangements.

One example would be providing assistance to firms that are temporarily distressed.

Normally, firms with transient low profitability would not be able to convince a lender to forbear on upcoming payments because the lender might fear that doing so would only allow other creditors to be repaid and the lender may never recover its funds if the borrower's fortunes do not improve.

Within groups, however, the banks have incentives to take a long-term view and to assist the borrower, recognizing that when the borrower recovers they can recoup their assistance.

Hoshi, Kashyap and Scharfstein found that this pattern was present empirically: group-affiliated firms were able to invest and sell more when they were in trouble than unaffiliated firms.

A second example is the prediction that many firms might have trouble obtaining funding because lenders could not fully judge their investment prospects and ability to repay.

These borrowing constraints could force firms to grow more slowly than otherwise if these information problems were not present.

Within a group these problems should be less of an issue because of the repeated interactions and other information sharing arrangements practiced by the groups.

Hoshi, Kashyap and Scharfstein tested this prediction by examining whether the keiretsu banks supported the keiretsu firms by allowing them to invest irrespective of whether the firms had cash-on-hand to pay for the investment.

They found that the investment of the group firms was less sensitive to the resources inside these firms compared to similar firms that were not group members.