Callum Jones, New York University

I am a PhD candidate in Economics at the Graduate School of Arts and Sciences at New York University.

My research interests are in macroeconomics, with a focus on monetary policy, open-economy macroeconomics, and growth.

I will be available for interviews at the 2017 ASSA meetings in Chicago.

Please click here for my CV.


Job Market Paper

In 2015, US output per capita was 12.5% below its 1950--2007 trend. This paper uses an estimated New Keynesian model to decompose the sources of this gap. The model features demographic trends, real and monetary shocks, and the occasionally binding zero lower bound on nominal interest rates. I calibrate demographic trends to observed mortality and fertility rates between 1940 and 2015, and estimate the model's business cycle processes on quarterly data from 1984 to 2015. The model is successful in accounting for the post-1990 trends in the real interest rate, the employment-population ratio, and labor productivity growth. I extract the model's structural shocks over the zero lower bound period and find that about half of the gap between output per capita and its long-run trend is due to the aging of the population, 30 per cent is due to real factors, 5 per cent to nominal factors, and 15 per cent to the binding zero lower bound.

Working Papers

We argue that a secular decline in competition in the goods markets explains several macroeconomic puzzles, in particular low interest rates and weak corporate investment. Corporate investment in the U.S. is lower than what one would expect based on profitability, discount rates, or the market value of corporate assets (Q-theory). Moreover, this investment gap is driven by firms located in less competitive industries. We explore the macro-economic consequences of this phenomenon in a DSGE model with time-varying parameters and an occasionally binding zero lower bound constraint on nominal interest rates (ZLB). We calibrate the model using micro data on investment and we show that the trend decrease in competition can explain the joint evolution of investment, Q, and the nominal interest rate. Absent the decrease in competition, we find that the U.S. economy would have escaped the ZLB by the end of 2010 and that the nominal rate today would be close to 2%.

We measure how forward guidance in the United States at its zero lower bound affects a small open economy. Using piecewise linear methods, we jointly estimate the structural parameters of a two-country model and the expected durations of the fixed interest rate regimes in the US and Canada. We decompose the durations into a component implied by the constraint itself and calendar-based forward guidance. We conduct counterfactuals and find that without forward guidance in the US, monetary policy in Canada would not have been as constrained by its effective lower bound because its exchange rate would have appreciated significantly less.

"Unanticipated Shocks and Forward Guidance at the Zero Lower Bound." 2015.

I study calendar-based forward guidance when the nominal policy interest rate is at the zero lower bound (ZLB). To do this, I develop a very fast and accurate algorithm to approximate the ZLB in large DSGE models. The method handles occasionally binding constraints but additionally accommodates credible announcements about the path of the policy rate intended to extend the duration of the ZLB regime. Using the algorithm, I develop a new decomposition of a ZLB duration into two components, one due to structural shocks and another assigned to forward guidance. The method is used to show: (i) unanticipated shocks which hit during a forward guidance duration can increase ex-post inflation and output volatility, (ii) a simple rule connecting the forward guidance duration to inflation and output mimics optimal policies, and (iii) government spending multipliers at the ZLB fall significantly when a forward guidance rule is in use.

This paper examines the interaction between rural-urban migration and the distribution of a country's human capital in a two-sector growth model with sector-specific human capital. In the model, workers in each sector improve their human capital by learning from more productive workers. Rural workers can choose to migrate to the urban sector and accumulate urban human capital. Migration changes the human capital distributions in both sectors, affecting the learning opportunities available to workers. This process gradually equalizes the returns to human capital accumulation, slowing the migration. A calibrated version of the model replicates empirical facts along the transition path and generates the Kuznets curve--the inverse-J shaped profile of the Gini coefficient over time. I use the model to show that an output-maximizing planner would shift rural workers into urban areas at a quicker pace to take advantage of the superior human capital accumulation environment in the urban sector.

In Progress

"Trend Growth, Forward Guidance and the Zero Lower Bound."

In this paper, I estimate a New Keynesian model with capital in which the nominal interest rate is subject to the zero lower bound (ZLB). I estimate structural breaks in trend growth and inflation, estimating both the magnitude and date of changes to these parameters. I find a 0.8 to 1.5 percentage point decline in annual trend growth around 2001, preceding the Great Recession, and show that the stance of monetary policy since the crisis period was significantly affected by this structural change. With the estimated model, I identify and study calendar-based forward guidance at the ZLB and find support that it was used from 2011 onwards. I find that the estimated forward guidance duration is positively correlated with technology shocks, suggesting that, through use of its forward guidance channel, monetary policy at the ZLB mirrors a more standard Taylor rule policy operating in normal times. This finding has implications for the size of government spending multipliers at the ZLB.

"Towards a Model for Evaluating Monetary Policy at the Zero Lower Bound," with Mariano Kulish and Andrea Tambalotti.


"A Graphical Representation of an Estimated New Keynesian Model," with Mariano Kulish. 2016. Applied Economics. Dynare Working Papers #3. Matlab and Dynare files.

"Detection of Anticipated Structural Changes in a Rational Expectations Environment," with Luis Uzeda. 2013. Applied Economics Letters.

"Long-Term Interest Rates, Risk Premia and Unconventional Monetary Policy," with Mariano Kulish. 2013. Journal of Economic Dynamics and Control. RBA Research Discussion Paper 2011-02. Matlab files, notes and documentation.

"Time-Varying Term Premia and the Expectations Hypothesis in Australia," with Richard Finlay. 2011. Applied Economics Letters.

"Return to Wine: A Comparison of the Hedonic, Repeat Sales, and Hybrid Approaches," with James Fogarty. 2011. Australian Economic Papers.

"House Price Measurement: The Hybrid Hedonic Repeat-Sales Method." 2009. Economic Record.