Ernest Liu

Ernest Liu’s research studies the implications of weak financial institutions for economic growth, allocation of resources, and economic development. One strand of his work uses network theory to study linkages across economic sectors, technological classes, and countries, and the implication of such linkages for policy. Another strand of work shows how low, long-term interest rates affect market concentration and productivity growth; how banks with market power respond to interest rate ceilings in small business lending; and, how financial market imperfections not only distort economic allocations via underinvestment but may greatly amplify effects due to interactions across economic sectors or because the relationships between borrowers and lenders create under-development traps. He received his Ph.D. in Economics from MIT and joined Princeton’s faculty in 2019.