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A Long and a Short Leg Make for a Wobbly Equilibrium

Nicolae Gârleanu et al.

The American Economic Review2026https://doi.org/10.1257/aer.20211548article
FT50AJG 4*ABDC A*
Weight
0.50

What the paper says

We provide a model to explain how the interaction between the spot and lending markets for stocks can lead to abrupt changes in short selling activity. Furthermore, rational short sellers may choose to abandon the market even as mispricing widens. We document empirically that the dynamics of short selling are fat tailed and subject to abrupt changes, especially for the stocks that the model identifies as susceptible to such dynamics. (JEL G11, G12, G14, G41)

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https://doi.org/https://doi.org/10.1257/aer.20211548

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@article{nicolae2026,
  title        = {{A Long and a Short Leg Make for a Wobbly Equilibrium}},
  author       = {Nicolae Gârleanu et al.},
  journal      = {The American Economic Review},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1257/aer.20211548},
}

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A Long and a Short Leg Make for a Wobbly Equilibrium

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.