Xitong Hui

Xitong Hui

PhD Candidate in Economics

Department of Economics

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English, Mandarin
Key Expertise
Macro-finance, International macroeconomics and finance, Asset pricing

About me

Xitong is a PhD job market candidate in the Department of Economics. Her main research interest is macro-finance. Her job market paper studies the effect of fundamental drivers of rising asset prices on top wealth inequality and welfare inequality through the channel of leverage. She also works on international finance topics such as the determinants of sovereign bond safety. 

Xitong holds a BSc in Mathematical Economics from Central University of Finance and Economics and a MSc in Econometrics and Mathematical Economics from LSE. She has taught both introductory courses to first-year undergraduate students and advanced macroeconomics courses to Master students at LSE.

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Asset Prices, Welfare Inequality, and Leverage

Do rising asset prices make savers better off? The traditional way to answer this question is to study wealth inequality. This paper studies the effect of fundamental drivers of rising asset prices (a rise in patience, an increase in productivity, financial innovation, or a bubble driven by financial frictions) on top welfare inequality between super rich entrepreneurs (borrowers) and savers through leverage. Using a model with financial frictions, idiosyncratic risks, and unequal capital income, I show that different fundamental drivers of rising asset prices move wealth inequality and savers' welfare in different directions by affecting leverage differently. Given the rising asset prices, falling risk-free rates, and rising top wealth inequality observed in the U.S., the model suggests that the rising patience of the super-rich is the main driver of the trend, and therefore savers are worse off.

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Publications and additional papers

Working Papers 

A Theory of Sovereign Bond Safety: Country Size and Financial Friction, July 2021
This paper provides a theory of sovereign bond safety where country size interacting with financial fiction is the key determinant. A larger country spills over consumption and domestic risk through international trade and financial market to a smaller country, which improves the hedging benefit of the larger country's bond globally: country size spillover effect. Financial friction drains international financial market liquidity and creates endogenous systemic risk instability between normal times and crisis. In crisis, international risk-sharing is limited and domestic risk is amplified, which improves the hedging benefit of domestic bond: financial friction effect. The larger country's bond is a global safe asset when country size spillover effect dominates financial friction effect. The model explains the uncovered interest rate parity (UIP) violation, UIP reversal, flight-to-safety, sovereign bond covered interest rate parity (CIP) deviations and convenience yields.



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Office Address
Department of Economics
London School of Economics and Political Science
Houghton Street, London WC2A 2AE