Konstantin Platonov

I am a graduate student and PhD Candidate at the Economics Department, University of California Los Angeles.

My interests are macroeconomics and international economics.

I am on the job market in 2018/19 and I will be available for interviews at the ASSA meeting in Atlanta, GA.


Job Market Paper:

The Forward Premium Anomaly: Overlapping Generations, Multiple Equilibria, and Shocks to Beliefs

Uncovered interest parity states that the carry trade should deliver zero profit, on average. The data robustly reject this hypothesis in a large sample of countries: high interest rate currencies earn excess returns at short horizons and negative excess returns at longer horizons. I rationalize this observation in a two-country overlapping generations model with complete markets that features multiple dynamic equilibria. Because newborns cannot make decisions about consumption and savings before they are born, there is a set of self-fulfilling beliefs of the currently alive generations about the decisions of the future newborns. I utilize the multiplicity of dynamic equilibria by imposing a structure on the formation of beliefs. Beliefs are self-fulfilling, and shocks to these beliefs generate a large and volatile risk premium that is correlated with the interest rate differential. Changes in uncertainty about beliefs cause a reversal of expected excess returns associated with the current interest differential, similar to the reversal found in the data. I provide empirical evidence in favor of my mechanism and show that persistence of past expectations can account for most of the observed deviation from uncovered interest parity.


Publication

Animal Spirits in a Monetary Model, joint with R. Farmer. Forthcoming in European Economic Review (Accepted subject to minor revisions). Available here