About

Sandro Brusco is a Professor in the Department of Economics at Stony Brook University. His research focuses on various areas within economics, including mechanisms for mergers and acquisitions, liquidity coinsurance, moral hazard, financial contagion, and economic cooperation. He has contributed to the understanding of efficient mechanisms in economic transactions and has published in reputable journals such as the International Economic Review, the Journal of Finance, the Journal of Public Economics, and the Journal of Economic Theory. Professor Brusco is actively involved in the academic community, serving as a reviewer for the National Science Foundation and as a referee for several leading economic journals, including the American Economic Review, Econometrica, and the Journal of Political Economy. He is also a member of the Editorial Board of The B.E. Journals of Theoretical Economics. His work often involves theoretical models and analysis related to economic environments, coordination in auctions, and political economy, contributing to both theoretical and applied economic research.

Research topics

• Finance
• Economics
• Monetary economics
• Microeconomics
• Econometrics
• Financial economics
• Business
• Macroeconomics
• Mathematics

Selected publications

• Optimal Financial Contracting and the Effects of Firm’s Size

  2024-01-01

  reportOpen access1st authorCorresponding

  We consider the design of the optimal dynamic policy for a firm subject to moral hazard problems.With respect to the existing literature we enrich the model by introducing durable capital with partial irreversibility, which makes the size of the firm a state variable.This allows us to analyze the role of firm's size, separately from age and financial structure.We show that a higher level of capital decreases the probability of liquidation and increases the future size of the firm.Although analytical results are not available, we show through simulations that, conditional on size, the rate of growth of the firm, its variability and the variability of the probability of liquidation decline with age.

  PublisherOA PDFDOI

• Optimal Financial Contracting and the Effects of Firm’s Size

  SSRN Electronic Journal · 2024

  1st authorCorresponding
  • Economics
  • Econometrics
  • Monetary economics
  PublisherDOI

• Optimal financial contracting and the effects of firm's size

  The RAND Journal of Economics · 2021 · 3 citations

  1st authorCorresponding
  • Economics
  • Econometrics
  • Monetary economics

  Abstract We consider the design of the optimal dynamic policy for a firm subject to moral hazard problems. With respect to the existing literature we enrich the model by introducing durable capital with partial irreversibility, which makes the size of the firm a state variable. This allows us to analyze the role of firm's size, separately from age and financial structure. We show that a higher level of capital decreases the probability of liquidation and increases the future size of the firm. Although analytical results are not available, we show through simulations that, conditional on size, the rate of growth of the firm, its variability, and the variability of the probability of liquidation decline with age.

  PublisherDOI

• Internal financing, managerial compensation and multiple tasks

  Annals of Finance · 2020 · 2 citations

  1st authorCorresponding
  • Finance
  • Business
  • Economics
  PublisherDOI

• Proportional Systems with Free Entry. A Citizen-Candidate Model

  RePEc: Research Papers in Economics · 2019-01-01

  preprintSenior author

  We analyze the equilibrium of a proportional electoral system with free entry in a citizen candidate model. In proportional systems the policy outcomes are typically decided through legislative bargaining and a perspective entrant has to worry about the governing coalitions that will be able to reach 50% of the seats. We show that there are equilibria with medium-sized parties, i.e. no party has absolute majority but the number of parties is relatively small. However, when the number of seats is su±ciently large, all equilibria must have at least 4 parties. We also discuss the impact of variations of the electoral formula, such as the introduction of of thresholds.

  Publisher

• Internal Financing, Managerial Compensation and Multiple Tasks

  RePEc: Research Papers in Economics · 2018-01-01

  preprint1st authorCorresponding

  We study the optimal capital budgeting policy of a firm taking into account the choice between internal and external financing. The manager can dedicate effort either to increase the short-term profitability of the firm, thus generating greater immediate cash-flow, or to improve long-term perspectives. When both types of effort are observable, low return firms end up using internal funds, while high return firms use external capital markets. When effort to boost short-term cash flow is observable, while effort to boost long-term profitability is not, non-monotonic policies may be optimal, that is. Financing switches back and forth between internal and external funds as the quality of the project increases.

  Publisher

• Cycles in public opinion and the dynamics of stable party systems

  Games and Economic Behavior · 2016-11-01

  preprintOpen access1st authorCorresponding
  PublisherOA PDFDOI

• Cycles in Public Opinion and the Dynamics of Stable Party Systems

  SSRN Electronic Journal · 2015-01-01

  articleOpen access1st authorCorresponding
  PublisherDOI

• Reputational Concerns and Price Comovements

  SSRN Electronic Journal · 2014-01-01

  articleOpen accessSenior author
  PublisherDOI

• TIMING OF LUMPY INVESTMENT, PRICING AND TECHNICAL PROGRESS

  Bulletin of Economic Research · 2014-11-12

  article1st author

  ABSTRACT In equipment‐intensive sectors – such as water utilities, power generation, and gas – billions of dollars are spent in capital equipment. The nature of the investment is often lumpy: at some point a plant has to be replaced and a large investment is required. We characterize the dynamic optimal investment policy of profit‐maximizing and welfare‐maximizing firms. We first show that, when there is no technical progress, the duration of the plant is longer for a profit‐maximizing firm. We then consider technical progress leading to either capacity expansion or to operating costs reduction. We show that duration tends to increase when the installed capacity increases over time, while it tends to decrease when technical progress reduces operating costs, both for profit‐maximizing and welfare‐maximizing firms. Under some conditions, when capacity expands over time the duration of the plant is longer for a profit‐maximizing firm than for a welfare‐maximizing firm.

  PublisherDOI

Frequent coauthors

• Giuseppe Lopomo

  Duke University

  28 shared

• Massimo Bordignon

  Università Cattolica del Sacro Cuore

  23 shared

• Fausto Panunzi

  Bocconi University

  9 shared

• Jaideep Roy

  8 shared

• Eva Ropero Moriones

  Universidad Europea de Madrid

  7 shared

• Siva Viswanathan

  University of Maryland, College Park

  5 shared

• Leslie M. Marx

  4 shared

• James J. Anton

  Duke University

  4 shared

Education

• Ph.D., Economics

  University of ...

  2000

• M.S., Economics

  University of ...

  1996

• B.A., Economics

  University of ...

  1994