Working papers
Why gradual and predictable? Bank lending during the sharpest quantitative tightening ever (joint with Lorenzo Burlon, Stephen Kho, Nikoleta Tushteva), ECB working paper series N. 3010 (R&R in Review of Financial Studies). The paper has been covered in a policy note for SUERF
Exploiting the recalibration of ECB’s outstanding central bank funding in 2022, we show that a sharp reabsorption of bank liquidity induces a tightening impact on credit supply, as intended when central banks reduce their balance sheets. The tightening originates from the sudden relative convenience for banks accustomed to large liquidity holdings to more rapidly adapt to the new environment. Moreover, we show that the associated reduction in credit supply has real economic effects.
Battle of the ages: distributional and aggregate effects of monetary policy in a model with age demographics (joint with Wouter den Haan, Falk Mazelis and Annukka Ristiniemi), ECB working paper series N. 3125
We develop a model in which agents face unemployment risk, but also age and eventually retire. We study the impact of different retirement schemes on life-cycle consumption and the monetary transmission mechanism. Agents save because of a fall in income upon retirement, changes along the life-cycle wage profile, and unemployment risk. Changes in retirement policies affect the distribution of available assets (bonds) among the middle aged and the young, which in turn can have a strong impact on the ability of the young to insure themselves against unemployment risk. Interestingly, it is possible that an increase in retirement benefits leads to higher consumption levels during sustained unemployment spells even though the associated increase in taxes reduces unemployment benefits. The reason is that this policy induces the middle aged to save less which leaves more of the available asset supply to the young. A reduction in the interest rate has a bigger impact on those for whom labor market conditions improve the most and– due to a larger negative income effect– has a smaller impact on those who save more. In terms of the aggregate impact of monetary-policy shocks, our paper confirms conventional wisdom that the expansion is magnified in the presence of incomplete markets, since it is then accompanied by a fall in precautionary savings. The novel aspect of our analysis is that the extent of the incompleteness, i.e., the ability of those subject to unemployment risk to insure themselves, is endogenous. Specifically, it is reduced as the young (middle-aged) hold a larger (smaller) fraction of the available asset supply and this distribution is not only affected by retirement policies, but also by government bond supply and the life-cycle wage profile. Thus, understanding the distribution of assets across different age cohorts is not only important for understanding life-cycle consumption patterns, but also business cycles.
Looking behind the financial cycle: the neglected role of the demographic cycle [Slides] [non technical summary (in Italian)], Temi di discussione Banca d'Italia (working paper series) N. 1149
Data demonstrate a correlation between demographic variables and financial cycles: an increase in the working age population is associated with an expansion of the financial cycle, that is, credit growth and increased housing prices. To account for this stylized fact, this paper uses an OLG model with data on housing prices, life-cycle of income, and consumption. A transitory baby boom, which increases the working age population, leads to higher housing prices and household borrowing.
Selected publications
Will the green transition be inflationary? Expectations matter (joint with Valerio Nispi Landi), IMF Economic Review, 73, 1195–1258 (2025). https://doi.org/10.1057/s41308-024-00262-x
Whatever it Takes to Save the Planet? Central Banks and Uncoventional Green Policies (joint with Valerio Nispi Landi), Macroeconomic Dynamics, 1-26. doi:10.1017/S1365100523000032. The paper has been covered also by Reuters and in a policy note for SUERF
Presentations: ECB internal seminar, Banca d'Italia lunch seminar, Macroeconomic Dynamics, e-axes Forum on Climate Change, Riksbank, EEA-ESEM.
Toward a green economy: the role of central bank’s asset purchases (joint with Valerio Nispi Landi), Internationl journal of Central Banking, Volume 19, Issue 5, December 2023. The paper has been covered also in a policy note for SUERF and the model has been used for assessing the impact of carbon tax on euro area economy in ECB economic bulletin article The macroeconomic implications of the transition to a low-carbon economy
Other research projects
Losers amongst the losers: the welfare effects of the Great Recession across cohorts, Research in Economics, Volume 77, Issue 1, 2023, Pages 34-59, ISSN 1090-9443, doi:10.1016/j.rie.2022.12.002 . The paper has been covered also by Bloomberg
Economic Growth and Wealth Inequality: the Role of Differential Fertility (joint with Alessandro Di Nola) [Slides 1 - Slides 2]