Global Capital Allocation Project (GCAP)

Well-functioning global markets deliver prosperity and stability, yet international policymakers face many frictions when designing policies that improve global outcomes. Some of the biggest challenges policymakers are navigating today include U.S.-China trade and financial relations, economic security, the role of reserve currencies, regulating offshore tax havens, and financial stability. 

The Global Capital Allocation Project (GCAP) is an international macroeconomics and finance research lab co-directed by professors Matteo Maggiori (Stanford University), Jesse Schreger (Columbia University), and Brent Neiman (University of Chicago, on leave at the U.S. Department of the Treasury). The lab’s goal is to shed light on how capital moves around the world to improve international economic policy. We focus on producing cutting edge research in salient global market issues and making our research impactful to policymakers in practice. Our approach is independent and data-driven, and we take a global view on crucial policy issues. 

We work closely with global policy institutions to translate our research insight into policy. Our close collaboration with the European Central Bank (ECB) on capital allocation in the Euro Area has resulted in research that has been used to support the Capital Market Union strategic initiative. We have provided testimony based on our estimates to the House Financial Services Committee of the U.S. Congress.

Our research focus areas include: 

1. Geoeconomics & economic security: Governments use their countries’ economic strength from financial and trade relationships to achieve geopolitical and economic goals. GCAP projects focus on uncovering, measuring, and analyzing geoeconomic power globally. We combine big data on trade and financial linkages to design better economic security policies.
    
2. Financial stability & global risk exposure: Euro Area financial centers such as Ireland, Luxembourg, and the Netherlands have grown enormous, which makes it hard to understand who owns what. In our projects with the ECB, we estimate who is behind this massive wealth and show that the Euro Area is less integrated than commonly understood.
    
3. Reserve currency competition & the role of China: China has one of the world's largest bond markets, yet its currency (RMB) plays a limited global role. What are the RMB internationalization prospects? We investigate who holds RMB bonds and study China’s strategy to internationalize its currency to both insure itself from foreign influence and build an alternative financial system to the dollar-based one.
    
4. Tax havens & offshore markets: Tax havens obscure the reality of global capital flows. Our research uncovers the financing structure of global firms that is obscured by tax havens and provides detailed estimates to researchers and policymakers on an ongoing basis. For example, we track Chinese companies in the Cayman Islands and U.S. companies in Ireland. 

Part of our impact comes from aiding other researchers who are interested in our approach. Whenever possible, we make the data and results from our research publicly available. For early career researchers, we run a significant educational outreach initiative, the Big-Data Initiative in International Macro-Finance, which shares knowledge, codes, and data as a starter kit for new researchers and fully funds 30 PhD students from schools worldwide to attend our in-person summer school each year.