Research
Research interests: My research interests fall broadly in monetary policy, monetary theory, central banking and aggregate housing markets. My most recent work deals with Central Bank Digital Currencies and the next generation of monetary policy tools. Other recent work investigates social media participation and human behavior.
Published papers
Cost of Floating Exchange Rates: Synthetic Control Estimation, International Journal of Central Banking, August 2023
Choice of Foreign Exchange Intervention and Inflation Targeting Commitment, with Jae H. Choi, Finance Research Letters, August 2021
Resources: online appendix
Can Google Trends Improve Housing Market Forecasts?, with Hao You, Curiosity: Interdisciplinary Journal of Research and Innovation, March 2021;
Resources: replication files
A Model of Social Media Participation and Depression, Economics Bulletin, 2020, vol. 40, issue 4, 2994 - 2999.
Resources: online appendix
Correcting Two Important Aspects of the Labor Market Lesson Plan, forthcoming, Journal of Economics and Finance Education.
Resources: U.S. labor market data; U.K. labor market data; simulation file
Housing Market and Labor Market Search, B.E. Journal of Macroeconomics, Advances Tier, Nov. 2018;
Resources: online appendix; replication files
Working papers
New Keynesian monetary policy via technical adjustments in an ample reserves environment
Resources: online appendix; video of presentation at the Central Bank of Chile (virtual)
Abstract: I develop a new Keynesian model in which the central bank manages an overnight reverse repo facility, provides collateralized lending through a discount window facility, and can independently affect the quantity of reserves and the level of interest rates. Three different sets of policy rules are tested in simulation exercises. I show that rules which actively manage the interest rates of the standing facilities provide superior stabilization results over a rule which directly targets the interbank rate as in the standard new Keynesian model.
Monetary operating procedures, lending frictions, and employment (joint work with Carl Walsh and David Florian-Hoyle)
Abstract: This paper studies a channel system for implementing monetary policy when bank lending is subject to frictions. These frictions affect the spread between the policy rate and the loan rate. We show how the width of the channel, the nature of random payment flows in the interbank market and the presence of frictions in the loan market affect the propagation of financial shocks that originate in the interbank market as well as in the loan market. We study the transmission mechanism of two different financial shocks: 1) An increase in the volatility of the payment shock that banks face once the interbank market is closed and 2) An exogenous termination of loan contracts that directly affect the probability of survival of credit relationships. Both financial shocks are propagated through the interaction of the marginal value of having excess reserves as collateral relative to other bank assets, the real marginal cost of labor for all active firms and the reservation productivity that selects the mass of producing firms. Our results suggest that financial shocks produce a reallocation of bank assets towards excess reserves and intensive and extensive margin effects over employment. The aggregation of those effects produce deep and prolonged recessions that are associated to fluctuations in an inefficiency wedge that appears in the aggregate production function of the economy. We show that this wedge depends on credit conditions and on the mass of producing firms.