Research

Abstract

I use data on unsecured consumer loans from Lending Club to study how peer-to-peer lending markets respond to monetary policy shocks. I find that both loan supply and demand decrease following unexpected increases in the federal funds rate. The contraction in supply is smallest for risky borrowers, while the decline in demand is largest for these borrowers. In contrast, both demand and supply increase following surprise LSAP contractions, with the increases being largest for risky borrowers. These findings suggest that peer-to-peer lending dampens the effectiveness of monetary policy transmission in unsecured consumer credit markets while increasing risk-taking.

Abstract

I document that the unemployment rate of both authorized and unauthorized immigrants increases more than that of natives following a surprise monetary contraction. Meanwhile, relative labor force participation decreases for authorized immigrants but increases for unauthorized immigrants. I show that (i) factors beyond differences in educational attainment and concentration in cyclical industries are relevant for explaining the demand-driven increase in immigrants’ relative unemployment, and (ii) the relative increase in unauthorized immigrants’ participation is driven by an "added worker effect."

Abstract

I document that differences in wealth between natives and immigrants contribute to the nativity wage gap. The evidence suggests that the non-earnings determinants of wealth, such as institutional barriers that prevent immigrants from accessing financial markets, and idiosyncratic preferences that affect immigrants’ willingness to use financial instruments, play a particularly important role.

Abstract

I study the "bank lending channel" using the 2004 repatriation tax holiday as a natural experiment. I isolate the effect of the repatriated funds on loan supply by (i) comparing the differences in lending between multinational and domestic banks pre- and post-repatriation and (ii) using the change in cash holdings abroad as an instrument for the repatriated funds. My results support the existence of the “bank lending channel.” I document that each additional repatriated dollar led to an increase of $0.04 in lending, which is driven entirely by commercial and industrial loans.

Abstract

I study monetary transmission via changes in contract terms for C&I loans. I find that non-price terms tighten and price terms relax following a surprise monetary contraction; consistent with a decrease in loan supply. Adjustments in non-price terms (maximum line size, covenants, and collateral requirements) are responsible for a statistically significant decrease in GDP of about 0.3 percentage points following a monetary surprise. I also document a lag between the response in bond market credit indicators and the loan contract terms. I interpret this finding as evidence of an important interaction between these two markets.

Abstract

I empirically examine the impact of credit frictions on labor market outcomes using immigrants as a case study. I document that an exogenous increase in credit frictions for immigrants leads to a decline in both their wages and unemployment. I argue that these results are explained by a decrease in immigrants' reservation wages. Faced with reduced access and/or willingness to use credit, immigrants are more likely to accept jobs for which they may be overqualified - even if these jobs pay lower wages - in order to secure employment and earn income.  These findings suggest that credit frictions are an important yet overlooked determinant of the nativity earnings and unemployment gaps.

Abstract

I examine differences in credit application and denial rates between U.S. natives and immigrants. I find that: (i) recent immigrants are more likely than natives to have their credit applications denied, regardless of citizenship or legal status; (ii) recent naturalized citizens apply at similar rates as natives, while recent noncitizens – both authorized and unauthorized – apply more; and (iii) among long-term immigrants, naturalized citizens and authorized noncitizens resemble natives in both application and denial rates, whereas unauthorized noncitizens apply less and are denied more. These results highlight that the inability to transfer credit histories across national borders and the lack of valid documentation may be significant barriers to immi- grants’ access to credit.

Abstract

I investigate the impact of tougher immigration policies on immigrants’ labor market outcomes. My difference-in-differences design centers on the 2002 enactment of the Enhanced Border Security and Visa Entry Reform Act and the Homeland Security Act. After controlling for confounding factors – including secular trends, post-9/11 discrimination, and the enactment of other reforms such as the PATRIOT Act – I find that these reforms had little impact on the labor market outcomes of unauthorized noncitizens, but led to a significant decline in labor force participation and an increase in wages among authorized immigrants. These results have important policy implications, suggesting that tougher enforcement may have unintended consequences for non-targeted populations.

Abstract

I document that immigrants are more likely to participate in the labor force following surprise monetary contractions. Financial frictions affecting immigrants and an "added worker effect" are two of the mechanisms that account for the supply-driven response in participation. These mechanisms explain why immigrants are both more likely to enter and less likely to exit the labor force after the contractions. My results challenge the prevailing view that monetary policy affects only labor demand and has little effect on labor supply.

Abstract

We document that wages of U.S. citizens increase more than those of noncitizens following voluntary job transitions. Moreover, we find that: (i) higher wealth in the year prior to the transition leads to higher post-transition wages; (ii) the effect of wealth on wages is primarily driven by asset holdings rather than debt holdings; and (iii) approximately 2.5 percentage points of the post-transition wage gap between U.S. citizens and noncitizens is explained by differences in asset holdings. We rationalize these findings using a directed search model with wealth accumulation and on-the-job search, calibrated to match well-documented differences in earnings and wealth between natives and immigrants. Wealth affects job-search decisions by altering the trade-off between wage and matching probability. Specifically, it provides self-insurance, allowing individuals to search for riskier jobs with higher wages but lower matching probabilities. 

Abstract

I study the response of Treasury yields to monetary surprises. A surprise contraction induces a clockwise tilt in the yield curve, which eventually reverses into a counterclockwise tilt. I argue that Open Market Operations (OMOs) shocks help explain these empirical findings and have important implications for macroeconomic aggregates and term premia. Using a calibrated model, I show that ignoring OMO shocks decreases the sensitivity of output and inflation to monetary surprises by as much as 0.02%. My analysis further shows that explicitly modeling OMOs helps account for the documented sensitivity of term premia to various other shocks.  

Abstract

I embed financial frictions in the form of infrequent debt renegotiation in an otherwise standard Heterogeneous Agent New Keynesian (HANK) framework, resulting in differentiated credit contracts across households in the economy. Following a credit expansion, the relaxation of credit conditions is about three times larger for households at the top of the wealth/income distribution relative to those at the bottom, in line with empirical evidence documented in the literature. This mechanism reduces the impact of credit expansions on aggregate consumption by about five times, thus dampening the effectiveness of monetary policy.