• What do inventories tell us about news-driven business cycles?
    Journal of Monetary Economics, 79, May 2016, 49-66 (with Nicolas Crouzet).
    Old version    Old appendix    Replication files

    Abstract: There is widespread disagreement over the quantitative contribution of news shocks to business-cycle fluctuations. This paper provides a simple identifying restriction, based on inventory dynamics, that tightly pins down this contribution. Structural models predict that finished-good inventories should fall when there is an increase in consumption and investment induced by news shocks. A structural VAR with these sign restrictions indicates that news shocks account for at most 20 percent of output volatility. Since inventories comove positively with consumption and investment in the data, shocks that generate negative comovement cannot account for the bulk of fluctuations.

  • Targeted transfers and the fiscal response to the great recession
    Journal of Monetary Economics, 59(S), December 2012, S50-S64 (with Ricardo Reis).
    VoxEU column    Working paper version    Appendix    Replication files     

    Abstract: Between 2007 and 2009, government expenditures increased rapidly across the OECD countries. While economic research on the impact of government purchases has flourished, in the data, most of the increase in expenditures was in government transfers. After documenting this fact, we argue that future research should focus on the positive impact of transfers. Towards this, we present a model in which there is no representative agent and Ricardian equivalence does not hold because of uncertainty, imperfect credit markets, and nominal rigidities. Targeted lump-sum transfers are expansionary both because of a neoclassical wealth effect and because of a Keynesian aggregate demand effect.
  • Time to build and the real-options channel of residential investment
    November 2017 (with Chamna Yoon). [2nd round R&R at Journal of Financial Economics]

    Abstract: A standard real-options model predicts that time-to-build investment decisions could be delayed by uncertainty over future revenue. This paper examines the first-order importance of this mechanism by looking into the micro-data for residential construction during the recent housing boom and bust. We develop a model of sequential irreversible investment with stochastic bottlenecks and estimate the model parameters based on the distribution of time-to-build and new house prices. In the estimated model, the boom period increase in time-to-build is due to frequent construction bottlenecks, and the decrease in house prices and the increase in uncertainty during the bust generated further delays in construction. 
  • The role of durables replacement and second-hand markets in a business-cycle model
    March 2018. [R&R at Journal of Money, Credit and Banking]

    Abstract: Transactions of used durables are large and cyclical, but their interaction with purchases of new durables has been neglected in business-cycle studies. I fill in this gap by introducing a business-cycle new model of durables where households resell their goods to the second-hand market and the production of new durables is affected by the supply of used goods. The model delivers three conclusions: markups are smaller for goods that are more durable and more frequently replaced; markups are countercyclical for durables, resolving the comovement puzzle of Barsky, House, and Kimball (2007 American Economic Review); and procyclical replacement demand amplifies durable spending.

  • Process innovation and product diffusion through trade: A study of US automobile exports from 1913 to 1940
    preliminary draft (with Dong ChengMario Crucini, and Hakan Yilmazkuday).

  • Seasonal cycles and the timing of residential investment
    (with Chamna Yoon).

  • Inventory disinvestment spikes
    (with Nicolas Crouzet).