Available for interviews at
European Job Market for Economists (EEA)
Allied Social Science Associations (ASSA)
Heterogeneous Agents, Monetary Policy, and Optimal Policy
"Optimal Monetary Policy in HANK "(Job Market Paper)
In this project, I study optimal monetary policy in a New Keynesian model with heterogeneous households. I use the continuous-time formulation and the numerical techniques from Kaplan et al. (2018) and expand the dynamic programming approach to the optimal policy proposed by Dixit et al. (1994) and further developed by Nu˜no and Thomas (2016). I show that occasionally binding borrowing constraints significantly change the way Ramsey planner uses monetary policy relative to the economy without borrowing constraints. I find that both in response to contractionary TFP shock and shock that reduces the desired firms’ markup the wage/dividends margin is no longer as important. Instead Ramsey planner finds it optimal to reduce the real interest rate in order to relax the borrowing constraint at least for some households. Relaxing the borrowing constraint by the means of monetary policy becomes the primary driver of the optimal response to a given negative shock to the economy regardless of the nature of the shock.
Research Papers in Progress
“Heterogeneous Markups Cyclicality and Monetary Policy" (with A. Chiavari and M. Morazzoni)
Firms’ markups cyclicality is at the heart of monetary policy transmission in the New Keynesian model. Using US Compustat data and employing local projection techniques, we uncover a novelempirical fact: dominant firms have a more countercyclical markup response after an unexpected contractionary monetary policy shock. Using a heterogeneous firms New Keynesian model with demand accumulation and endogenous markups that evolve over the life-cycle of producers, we show that this is due to the different demand elasticities faced by the firms. Dominant firms face a more inelastic demand, which implies a lower pass-through rate from costs to prices. Therefore, after a contractionary monetary policy shock, dominant firms pass less the reduction in marginal costs to prices compared to competitors, and increase their markups by more, as documented empirically. After calibrating the model to US micro-level data, we find that considering firms’ heterogeneous demand elasticities has important implications for monetary policy amplification.
“Labor and Family Dynamics in a Joint-Search Framework" (with M. Morazzoni)
We study the interplay of job search and family dynamics in a heterogeneous agents model. Empirical evidence for the US shows that married households have higher wages and lower unemployment rates compared to singles, and that highly-educated individuals tend to sort in couples and have higher marriage rates. We develop a model of job search and family dynamics to rationalize these findings. In our set up, married agents can insure better one another against unemployment and id- iosyncratic risks. But, importantly, endogenizing household’s formation generates both sorting and a mechanism of selection-into-joint-households that determines productivity differences in the sample composition of married and singles. The cali- brated model explains 75% of the wage marital premium, 60% of the unemployment marital gap and the bulk of the documented marital patterns, and it is used as a lab- oratory to evaluate optimal unemployment insurance schemes and family benefits for single and joint-households.