News and Selected Presentations


How household shocks ripple through local business networks: Evidence from Thailand

January 4, 2022

It is well-known that risk-sharing networks can smooth shocks, but local production networks can also propagate shocks; policy should consider both.

From supply chain disruptions to contagious illnesses, recent experience has underscored that what happens to one individual or firm can have implications for many others. For instance, public health lockdowns in the restaurant sector can harm the livelihoods of florists, fishermen, and bakers. But some interconnections are positive – for instance, funeral expenses may be covered by voluntary contributions from family or community members. The coexistence of multiple types of interconnections may determine whether shocks are smoothed or amplified by local networks.

Read more at VoxDev


Townsend Presents at Luohan Academy's "Technology and New Finance in the Digital Era"

May 28, 2021

Digitalization is disrupting financial systems, especially by transforming the relationship between finance and real economy, between financial institutions and fintech companies, as well as the general financial intermediary system and regulatory systems. 

On May 25, 2021, the Luohan Academy hosted leading thinkers from around the world for an exploration of digital disruption in financial systems. The by-invitation event covered an ambitious range of topics: blockchain and payments, digital footprints and access to credit, banks versus fintech versus big tech, the power of platforms, financial inclusion, technological leapfrogging in emerging markets, data protection, and the role of regulation, among other topics.

Read more and view the video


Townsend named to Minneapolis Fed's 2021-22 class of Visiting Scholars

April 29, 2021

The Minneapolis Fed announced a new cohort of 21 visiting scholars selected to conduct research while in residence at the Opportunity & Inclusive Growth Institute.

“The Visiting Scholar Program is a vital channel for bringing new ideas and insights into the Institute’s work and, by extension, the Fed System,” said Institute Director Abigail Wozniak. “Given the ongoing pandemic and related economic uncertainty, it is critical that we continue our work to understand how to enhance economic opportunity and well-being for all. Institute scholars play a key role in that effort.”

This class of academics was selected because their research contributes to understanding how to increase economic opportunity for all Americans. Collectively, the scholars use a variety of empirical methods and theoretical perspectives to answer research questions.

"We are excited about this new cohort,” said Assistant Director of Inequality Research Alessandra Fogli. “Each scholar is a leader in their field, and their broad interests bring diversity to our research agenda.”

(Read more)

Earlier News and Announcements

American Economic Association Announces Award Recipients for 2021, Townsend Named Distinguished Fellow

Tuesday, April 20, 2021

NASHVILLE, TN (April 20, 2021) - The American Economic Association (AEA) announces recipients of the John Bates Clark Medal, Distinguished Fellows, Foreign Honorary Members, and the Best Paper Awards of the American Economic Journals. These outstanding achievements will be honored at the AEA Annual Meeting in January 2022.

The Distinguished Fellow awards recognize the lifetime research contributions of distinguished economists. Since 1965, past presidents of the AEA are recognized as Distinguished Fellows, and up to four additional individuals may be elected for the award in one calendar year. Distinguished Fellows are selected by the AEA Nominating Committee and voting members of the Executive Committee, sitting together as an electoral college. A list of current and past Distinguished Fellows is available at

Distinguished Fellows

Alan Auerbach, University of California, Berkeley
Rebecca Blank, University of Wisconsin-Madison
Anne Case, Princeton University
Robert Townsend, Massachusetts Institute of Technology

Read more at the American Economic Association

Beyond Bitcoin: A new case for novel payment systems

Wednesday, October 14, 2020

The cryptocurrency Bitcoin has become a center of excitement, mystery, and controversy. Boosters have viewed it as an investment opportunity, a financial innovation, and a rival to state-controlled currencies; skeptics think it is an energy-wasting market bubble.

MIT economist Robert Townsend sees things differently. To Townsend, Bitcoin, for all its novelty, is part of a larger family of financial innovations, known as “distributed ledgers,” which allow people to perform financial activities without requiring a central authority to keep a master copy of those transactions and while minimizing the need for individuals to trust each other.

Read more at MIT News

Forthcoming in JPE: How corporate trade credit can help fortify supply chains during disruptions

Thursday, July 16, 2020

Robert M. Townsend, together with co-authors Niklas Amberg, Tor Jacobson, and Erik von Schedvin, will publish a new paper in a forthcoming issue of Journal of Political Economy that investigates the role liquidity and trade credits can play throughout supply chains. “Curbing Shocks to Corporate Liquidity: The Role of Trade Credit” has important implications for understanding how corporations might be affected – and recover – from COVID-triggered interruptions.

Read more: Professor Townsend shares key takeaways from this paper in this Q & A

Shocks and economic disruption: Networks, insurance, and propagation

Monday, April 20, 2020

How might the economic consequences of the global pandemic spread through an economy?

This column reports evidence from a household survey of village communities in Thailand, which sheds light on how a large shock experienced by one household may be mitigated by informal insurance networks. If not insured, however, it will propagate to others through local supply chains, leading to longer-term low-productivity structural shifts.

The research findings indicate the importance of a robust public response and improved market infrastructure for shocks like Covid-19.

Read more in Global Dev.

Townsend Delivers AFA Distinguished Keynote Lecture

Saturday, February 1, 2020

Professor Robert M. Townsend presented the American Finance Association’s Distinguished Lecture on January 4, 2020 at their annual meeting in San Diego, CA. Townsend, who was introduced by Program Chair Kenneth Singleton (University of Chicago), spoke on “Distributed Ledgers: Design and Regulation of Financial Infrastructure and Payment Systems.”

Townsend thanked the AFA for the lecture opportunity, citing it as a great chance to share “what I’ve been thinking about rather intensively over the last couple of years.” Townsend’s lecture focused on the role emerging distributed ledger technology plays in the global financial system and seeks to align the economic and financial underpinnings with the computer science ones driving the cryptocurrency fields. “I could have put ‘Bitcoin’ on the title or maybe ‘blockchain,’” observed Townsend, but he felt that doing so could be intellectually misleading. “Distributed ledgers are at the root, they came first.”

The video of the lecture can be watched here

Townsend Receives Seed Grant from J-WAFS to Examine Weather-Contingent Crop Insurance

Wednesday, May 29, 2019

Agricultural productivity technologies for small-holder farmers; food safety solutions for everyday consumers; sustainable supply chain interventions in the palm oil industry; water purification methods filtering dangerous micropollutants from industrial and wastewater streams — these are just a few of the research-based solutions being supported by the Abdul Latif Jameel Water and Food Systems Lab (J-WAFS) at MIT.

J-WAFS is funding these and other projects through its fifth round of seed grants, providing over $1 million in funding to the MIT research community. These grants, which are funded competitively to MIT principal investigators (PIs) across all five schools at the Institute, exemplify the ambitious goals of MIT’s Institute-wide effort to address global water and food systems challenges through research and innovation. 

Read more from MIT News

The Impact of Isolationist Policies: Insights from Regional Capital and Labour flows in Thailand

Friday, September 15, 2017

Big data with big theory reveal how restrictive regional economic policies can lead to lower national productivity and higher inequality

Within a given country, different regions interact with each other in capital, labour, and product markets, resulting in cross-regional flows of these factors and goods. Regions also differ from each other locally in many ways, including the specific financial obstacles faced by local residents (Paulson and Townsend 2004, Ahlin and Townsend 2007, Karaivonov and Townsend 2014). Can these regional differences be enough to generate flows of factor inputs that are consistent with the capital flows and labour migration seen in the available data? Furthermore, can these regional differences generate the observed and often quite uneven geographic concentration in economic activity that we see on the ground?

Read more at VoxDev

The Economics of Bank Supervision

Tuesday, April 12, 2016

Professor Townsend, with co-authors Thomas Eisenbach and David Lucca, penned a commentary for the Federal Reserve's "Liberty Street Economics" on the vital differences between bank supervision and regulation. 

"While bank regulation and supervision are the two main components of banking policy, the difference between them is often overlooked and the details of supervision can appear shrouded in secrecy. In this post, which is based on a recent staff report, we provide a framework for thinking about supervision and its relation to regulation. We then use data on supervisory efforts of Federal Reserve bank examiners to describe how supervisory efforts vary by bank size and risk, and to measure key trade-offs in allocating resources."

Townsend Delivers Fishelon Lecture in Tel Aviv

Tuesday, December 1, 2015

In the fall 2015, Professor Townsend delivered The Fishelson Lecture, in honor of economist Gideon Fishelson, at Tel Aviv University titled, "Measurement, Analysis, and Design of Financial Systems: First Principles as the Foundation of Policy." The presentation explains new principles for using theory and data to analyze financial systems.

Related Links:

Gideon Fishelson Lecture Series at Tel Aviv University

Video of the Lecture

Powerpoint Presentation of Lecture




"This Time There Was No Keynes"
Economic Principals
October 11, 2015
Journalist David Warsh reviews former Federal Reserve Chairman Ben Bernanke's latest book and refers to Townsend's 1979 paper, "Optimal Contracts and Competitive Markets with Costly State Verification," in his discussion.

Townsend, Kilenthong Discuss Market-Based Solution to Price Externalities
VOX - CEPR Policy Portal
November 9, 2014
In the aftermath of the recent Global Crisis, models with pecuniary externalities have regained the interest of researchers as they seek policy interventions and regulations to remedy externality-induced distortions. There is a growing literature on fire sales and amplifiers where private agents undervalue net worth in a period of financial distress because they fail to internalise that net worth has positive spillovers on other agents.

How a Health Care Plan Quickly Lowered Infant Mortality in Thailand
MIT News
April 30, 2014
A new paper, "The Great Equalizer: Health Care Access and Infant Mortality in Thailand", finds that improved hospital access lowered the infant death rate among Thailand's poor within a year. In this article, Peter Dizikes of MIT News Office, interviews Nathaniel Hendren and Robert M. Townsend, co-authors with Jonathan Gruber, to to find out more about this dramatic shift.

Infrastructure Spending in Thailand: Fast Train Coming
The Economist
October 14, 2013
This article explores planned large-scale infrastructure -- including high speed rail -- and stimulus spending in Thailand.  Opponents of the program have called for fiscal prudence and have questioned the amount of public debt it would require.  MIT Professor Robert M. Townsend points out, however, that average debt-to-asset ratios are low and have been decreasing since 2006, a fact which suggests that concerns about spending are overstated.

Book Review: Chronicles from the Field: The Townsend Thai Project
London School of Economics Review of Books
August 15, 2013
Joana Lenihan reviews "Chronicles from the Field: The Townsend Thai Project." In her review, she notes, "(The) book gives us valuable insights on the running of such a project and is written in an honest fashion, which will appeal to readers from a wide variety of disciplines, and to both academic and non-academic readers alike."

Insights from 15 years of Fieldwork in Thailand
Development Impact Blog (World Bank)
July 22, 2013
David McKenzie, a lead economist at the Development Research Group of the World Bank, offers insight and discussion of Professor Townsend's new book Chronicles from the Field on the World Bank's development blog. 

Microfinance in Thailand: The biggest lender of them all
The Economist
January 1, 2013
The Economist blog "Schumpeter" examines Thailand's microfinance program, citing the findings of Robert M. Townsend and Joseph Kaboski's 2011 paper, "A Structural Evaluation of a Large-Scale Quasi-Experimental Microfinance Initiative."

Townsend Elected New Member of National Academy of Sciences
National Academy of Sciences
May 1, 2012
Robert M. Townsend was elected as a 2012 new member of the National Academy of Sciences for his distinguished and original research. Established in 1863, the National Academy of Sciences annually selects new members within the scientific and engineering fields dedicated to the use of science and technology for public good. Townsend is among 84 newly elected members of the now 2,152 active members of the National Academy of Sciences.

Townsend Awarded 2011 Laffont Prize in Economics
MIT News
November 18, 2011
Robert M. Townsend has been named the 2011 recipient of the Jean-Jacques Laffont Prize in economics for his work in Thailand, combining the theoretical and applied aspects of economics.  The prize will be awarded by the Institute of Industrial Economics (IDEI) in January 2012.

Townsend on Development, Poverty and Financial Institutions
Interview on EconTalk, hosted by Russ Roberts
March 15, 2011
Robert M. Townsend of MIT and the Consortium on Financial Systems and Poverty talks with EconTalk host Russ Roberts about development and the role of financial institutions in growth. Drawing on his research, particularly his surveys of households in Thailand, Townsend argues that both informal networks and arrangements and formal financial institutions play important roles in dealing with risk. Along the way, he discusses the role of microfinance in poor countries and the potential for better financial arrangements to lead to higher growth and the accumulation of wealth.

Economists reveal factors that help poor people lift themselves out of poverty.
October 26, 2010
What factors contribute to poor people in developing countries lifting themselves out of poverty? A forthcoming paper by economists Anan Pawasutipaisit of Thammasat University and Robert M. Townsend of MIT provides important insights into what kinds of households might be most effective at moving themselves out of poverty and how they are able do it. Their paper, which is due to be published in the peer-reviewed Journal of Econometrics, suggests that poor people who skillfully manage their assets are especially successful in improving their net worth. The authors discovered that the ability of poor families to increase their wealth was strongly related with their rate of saving and, even more so, with their ability to create a high return on assets.

Templeton Foundation highlights Enterprise Initiative’s work.
John Templeton Foundation 2008 Capabilities Report.
October 15, 2008
"We actually are the ones being trained by the successful individuals who are out there -- we learn from them, from what they do, and how they overcome obstacles."  That is the modest analysis offered by Professor Robert M. Townsend of the ambitious program over which he is presiding, funded by a $3.3 million Templeton grant, "Discovering the Power of Free Enterprise to Create Wealth and Alleviate Poverty Through a New Applied General Equilibrium Enterprise. The shorthand name for the project is "The Enterprise Initiative" and it is a collaborative effort between senior researchers at three major institutions: the University of Chicago, the Poverty Action Lab at the Massachusetts Institute of Technology, and the Economic Growth Center at Yale University.

Enterprising spirit: Economics professor Robert Townsend examines Thai entrepreneurship.
By William Harms. University of Chicago Magazine, Jan/Feb 08, Vol. 100, Issue 3.
January 1, 2008
The Thai Family Research Project is a ten-year longitudinal study begun in 1997 by Robert M. Townsend. With a group of Thai collaborators, Townsend has compiled a comprehensive database, documenting how rural people in the rapidly developing country are, for example, borrowing money to invest in new farm equipment or purchasing vehicles to begin trucking businesses. The aim—as the title of his forthcoming book, Financial Systems in Developing Economies; Growth, Inequality, and Policy Evaluation in Thailand (Oxford University Press), makes clear—is to help researchers and policy-makers guide emerging nations into the global economy.