Research
Journal Articles
"Unintended Consequences of Central Bank Lending in Financial Crises", (2023), The Economic Journal, 134, pp. 728 - 765.
"Some Unconventional Properties of New Keynesian DSGE Models" (2023), with Ben Heijdra, De Economist, 171, pp. 139-183.
"The long-run effects of risk: an equilibrium approach" (2023), with Joao Madeira and Nuno Palma, European Economic Review, 153, April 2023, 104375.
"Sovereign Debt and Bank Fragility in Spain" (2017), with Sweder van Wijnbergen, Review of World Economics, 153, pp. 511-543.
"Financial fragility, sovereign default risk and the limits to commercial bank bail-outs" (2014), with Sweder van Wijnbergen, Journal of Economic Dynamics and Control, 43, pp. 218-240.
"Utilizing redox-chemistry to elucidate the nature of exciton transitions in supramolecular dye nanotubes" (2012), with D.M. Eisele, C.W. Cone, E.A. Bloemsma, S.M. Vlaming, R.J. Silbey, M.G. Bawendi, J. Knoester, J.P. Rabe and D.A. Vanden Bout, Nature Chemistry 4, pp. 655-662
Working Papers
March 2024: "Monetary financing does not produce miraculous fiscal multipliers" (2024).
Abstract: High levels of government debt raise the question to what extent the private sector will be willing to absorb the additional government debt that would finance future fiscal stimuli. One alternative is to money-finance such stimuli by letting the central bank buy the additional bonds and permanently retain these on its balance sheet. In this paper, I investigate the effectiveness of such money-financed fiscal stimuli when the central bank pays interest on reserves, and focus on the case where reserves and bonds are not perfect substitutes. I show for several New Keynesian models that money-financed fiscal stimuli have zero macroeconomic impact with respect to debt-financed stimuli, despite reducing funding costs for the consolidated government. Finally, I investigate the quantitative impact of money-financed fiscal stimuli for an extension where this `irrelevance result' is broken, and find that the impact is substantially smaller than in the literature.
December 2023: "Financial Fragility and the Fiscal Multiplier" (2023), with Sweder van Wijnbergen, revised & resubmitted at the Journal of Money, Credit and Banking.
Abstract: We show that undercapitalized banks with large holdings of government bonds subject to sovereign default risk lead to a new crowding-out channel: deficit-financed fiscal stimuli lead to higher bond yields, triggering capital losses for the banks. Banks then cut back loans, thereby substantially reducing fiscal multipliers. Crowding out increases for longer maturity bonds and higher sovereign default risk. We estimate a DSGE model with financial frictions for Spain and find strong support for these results. The DSGE results further show strong nonlinear effects: the cumulative multiplier decreases substantially with the size of the stimulus, as well as with the amount of time between the announcement and implementation of the stimulus.
August 2023: "Old-Keynesianism in the New Keynesian model" (2023), revised & resubmitted at De Economist.
Abstract: I investigate an `old Keynesian' fiscal policy in which government spending endogenously responds to inflation and the output gap when the nominal interest rate is pegged at the ZLB. I do so within a standard Representative Agent New Keynesian model (RANK), as well as a two-period Overlapping Generations New Keynesian model (OLG-NK). For both model versions, I find that the equilibrium values for inflation and the output gap under a standard Taylor rule regime can be replicated under the `old Keynesian' regime. However, a unique stable countercyclical equilibrium is only feasible within the OLG-NK model.
May 2021: "To Bail-in or to Bailout: that's the (Macro) Question" (2021), with Matthijs Katz, under revision.
Abstract: In this paper we construct a dynamic general equilibrium model with limited liability banks to compare financial stability and macroeconomic outcomes under a regime in which banks are bailed out by the government with outcomes under a regime in which bank creditors are bailed in. We find that long-run investment, capital, output, and consumption are higher under the bailout regime. Bailouts also mitigate the impact of financial crises with respect to the bail-in regime, as lower funding costs increase banks' profitability. Bailouts, however, introduce moral hazard, which substantially increases the fraction of banks that need to be recapitalized from 0.24% per quarter under the bail-in regime to 3.12% per quarter under the bailout regime. The frequency of financial crises, however, hardly increases. Finally, we find that welfare is highest under the bailout regime.
Working Papers (old)
"The Macroeconomic Consequences of Higher Capital Requirements"Â (2018), with Sweder van Wijnbergen.
Publications (non peer-reviewed):
"Eurozone-begrotingsunie zou duur uitpakken voor Nederland" (2022), with Lex Hoogduin, Economisch Statistische Berichten, 107 (4815), pp. 498-501.
"De eurozone werkt slechter dan de dollarzone door de Noord-Zuid-verschillen" (2022), with Levi Kuiper, Economisch Statistische Berichten, 107 (4812), pp. 350-353.
"Alleen giften lossen de fundamentele eurozone-problemen niet op" (2020), Economisch Statistische Berichten, 105 (4788), pp. 379.
"Nederland moet kiezen tussen eurobonds of euro-exit" (2018), Economisch Statistische Berichten, 103 (4764), pp. 344-347.
"Herkapitalisatie banken schept ruimte voor stimulering" (2013), with Timotej Homar and Sweder van Wijnbergen, Economisch Statistische Berichten, 98 (4664), pp. 422-425.