The Relative Importance of Aggregate and Sectoral Shocks and the Changing Nature of Economic Fluctuations (Joint with Michael Pries and Eric Sims): An island model capturing the empirical finding that sectoral shocks became relatively more important in the mid-eighties, is consistent with several changes in business cycle moments observed in the data, including the decline in the cyclicality of labor productivity.
American Economic Journal: Macroeconomics, Forthcoming.
Raise Rates to Raise Inflation? Neo-Fisherianism in the New Keynesian Model | NBER WP (With Rob Lester and Eric Sims): Driven by the forward-looking nature of the model, increasing the inflation target in a New Keynesian model may require increasing the nominal interest rate in the short run.
Journal of Money, Credit and Banking, Forthcoming.
The Opportunity Cost(s) of Employment and Search Intensity (With Rob Lester): Recent evidence suggests flow utility is procyclical. Procyclical job search implies effective unemployment benefits (EUB) are countercyclical. Omitting endogenous search upwardly bias measured correlation between EUB and productivity.
Macroeconomic Dynamics, Forthcoming.
Inflation and the Evolution of Firm-Level Liquid Assets (Joint with Chadwick C. Curtis and M. Saif Mehkari): Liquid assets as a share of total assets for US corporations steadily declined from the 1960s to the early 1980s, and has since steadily increased; we show that inflation has played a major role.
Journal of Banking and Finance, Vol 81, August 2017, 24–35.
On the Desirability of Nominal GDP Targeting | NBER WP (With Rob Lester and Eric Sims): NGDP targeting is associated with smaller welfare losses than a Taylor rule, inflation targeting, may outperform output gap targeting if gap is observed with noise, and has more desirable properties related to equilibrium determinacy.
Journal of Economic Dynamics and Control, Vol 69, August 2016, 21–44.
Optimal Monetary Policy and Imperfect Financial Markets: A Case for Negative Nominal Interest Rates? (With Salem Abo-Zaid): A standard New-Keynesian model with money demand and financial frictions gives rise to negative optimal nominal rates; the tighter credit conditions, the more likely it is to be negative.
Economic Inquiry, Vol 54, Issue 1, January 2016, 215–228.
Borrowing Constraints, Collateral Fluctuations, and the Labor Market: Financial constraints introduce a wedge in the job-creation equation so that the relative bargaining position of firms is influenced by credit conditions. Fluctuations in collateral requirements generate significant movements in labor market variables.
Journal of Economic Dynamics and Control, Vol 57, August 2015, 112–130.
Are Supply Shocks Contractionary at the ZLB? Evidence from Utilization-Adjusted TFP Data | NBER WP (Joint with Rob Lester and Eric Sims): The basic New Keynesian model predicts that positive supply shocks are less expansionary at the zero lower bound (ZLB) compared to periods of active monetary policy. We test this prediction empirically using Fernald (2014)’s utilization-adjusted TFP series. In contrast to the predictions of the model, positive productivity shocks are estimated to be more expansionary at the ZLB compared to normal times. However, in line with the predictions of the basic model, positive productivity shocks have a stronger negative effect on inflation at the ZLB.
R&R at The Review of Economics and Statistics
Residential Mortgage and Nonrecourse Debt: Default Decision in a Dynamic Framework (New version coming soon): I develop a life-cycle model to study the effects of nonrecourse mortgages on the default decision of homeowners. In the model, the tenure decision is endogenously determined and, every period, householders decide whether to default on their mortgage in the presence of uncertainty in both income and house prices. By incorporating a riskless asset, I study the extent to which the recourse allowed to lenders can affect default rates. I find that while the size of the down payment has a noticeable impact in the default decision of homeowners in a recourse environment, the punishment that follows default does not.