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Contact information
Nuffield College
New Road, OX1 1NF Oxford
United Kingdom
Tel. +44 (0)1865 614 997
antonio.mele@economics.ox.ac.uk
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Postdoctoral Research Fellow
Department of Economics
Research Fellow
Nuffield College
Research interests
Macroeconomics, Dynamic Contracts, Monetary and Fiscal Policy, Computational Methods
Placement officers
Marcel Fafchamps (OXFORD)
marcel.fafchamps@economics.ox.ac.uk
Joachim Voth (POMPEU FABRA)
jvoth@crei.cat
References
I will be attending the ASSA meetings in Chicago, January 6-8, 2012
Research
"The Suboptimality of Commitment Equilibrium When Agents
Are Learning" (joint with Krisztina Molnar and Sergio Santoro)
(Job Market Paper)
The optimal monetary policy under commitment is always Pareto superior to the one under discretion
if agents have rational expectations. Moreover, if agents' beliefs slightly deviate from rational expectations,
the economy can be driven to the rational expectations commitment equilibrium if the monetary authority follows
a specific policy. In this paper, we show that a benevolent rational and committed central bank will never drive the
economy to the rational expectation commitment equilibrium when private agents are learning.
The best policy is to make people learn the discretionary equilibrium instead.
This is surprising, since it is well known that the discretionary equilibrium suffers from the stabilization bias.
"Repeated Moral Hazard and Recursive Lagrangeans" (revise and resubmit, Journal of Economic Dynamics and Control)
This paper shows how to solve dynamic agency models by extending recursive Lagrangean techniques à la Marcet and Marimon (2011) to problems with hidden actions.
The method has many advantages with respect to promised utilities approach (Abreu, Pearce and Stacchetti (1990)): it is a significant improvement in terms of simplicity,
tractability and computational speed. Solutions can be easily computed for hidden actions models with several endogenous state variables and several agents, while the
promised utilities approach becomes extremely difficult and computationally intensive even with just one state variable or two agents. Several numerical examples illustrate
how this methodology outperforms the standard approach.
"Dynamic risk sharing with moral hazard"
I characterize the optimal risk sharing contract in dynamic economies with
moral hazard. In a full information environment, an optimal contractual
arrangement prescribes that agents pool their income and divide it according
to a constant sharing rule. When moral hazard is present, the sharing rule
changes through time in order to reward effort. As a consequence, consumption inequality
is very persistent.
If agents have access to unmonitorable asset markets, then they can use
their assets to smooth consumption and reduce effort. An optimal contract would avoid that, by
imposing an additional cost (a wedge) on savings. As a result, trading in the asset market is restricted.
"Unemployment Insurance, Human Capital
and Financial Markets" coming soon
I characterize optimal unemployment insurance in the presence of human
capital life-cycle trends and incomplete financial markets.
Each worker is subject to unemployment risk, and exerts unobservable effort either to keep her job
(if employed) or to find one (if unemployed). Human capital accumulates when she is employed, while
depreciates when unemployed. She has access to financial (incomplete) markets, where she can buy or sell
risk-free bonds at a constant interest rate to self-insure against unemployment risk.
Trading in the financial market is not observable.
Numerical examples show that the optimal system has a decreasing but almost flat
subsidy, financed by an almost constant payroll tax.
"Money and Development" (joint with Radek Stefanski)
The inverse of velocity of money - the share of money in GDP -
increases with income. We argue that this drop in velocity takes place
because of a process of structural transformation - a shift of the economy
away from agriculture towards non-agriculture. In particular we argue that
agricultural goods in poor countries are characterized by a large degree
of barter trade, whilst non-agricultural goods require money. We then
explore the impact of varying interest rates on the start of structural
transformation. We show that, in the data, governments of poorer countries
tend to set higher nominal interest rates. Since, a positive nominal interest
rate acts as a tax on cash-goods, agents substitute away from (monetary)
non-agricultural products towards (non-monetary) agricultural products
and thus delaying structural transformation. If TFP growth rates are low in
the agricultural sector and high in the non-agricultural sector, there is an
additional cost to deviations from the Friedman Rule (i.e. zero nominal interest
rates) - a delay in structural transformation which results in lower growth rates.
Research in progress
"Optimal Taxation of
Families" (joint with Luigi Balletta)
"Strategic Default"
"Debt and Equity dynamics at the firm and at the aggregate
level" (joint with Andrea Caggese)
"Risk sharing, moral hazard and survival"
"A simple theory of the Stability Pact"
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