Min Wei

Curriculum Vitae (Adobe PDF format)              my FRB website and Google Scholar site


Working Papers

Abstract: We show that the slope of the yield curve affects bank lending and economic activity through an ``expected bank profitability channel.'' Using detailed banking data and term premium shocks identified via instrumental variables or event studies, we show that a steeper yield curve---when driven by higher term premiums rather than higher expected short rates---increases bank profits and loan supply. Intuitively, a higher term premium raises the expected returns from maturity transformation---a core banking activity---thereby incentivizing bank lending. This effect is more pronounced for banks with higher leverage. We interpret these findings using a simple bank portfolio model.

Abstract: Household inflation disagreement weakens the impact of forward guidance and monetary policy shocks, especially when inflation forecasts are positively skewed. This attenuation effect is not driven by endogenous responses of inflation disagreement to contemporaneous shocks. A model with heterogeneous beliefs about the central bank’s inflation target explains these observations. Agents expecting higher future inflation perceive lower real interest rates and borrow more, constrained by borrowing limits. Increased inflation disagreement results in more borrowing-constrained agents, leading to slower aggregate consumption responses to interest rate changes. This mechanism also provides a microeconomic foundation for Euler equation discounting, helping to resolve the forward guidance puzzle.

Abstract: We provide new evidence on the macroeconomic effects of the Federal Reserve's large-scale asset purchases (LSAPs), using a structural VAR with survey-based measures of the LSAP policy stance and instruments constructed from high-frequency yield changes. We estimate that, at the peak, a $500 billion LSAP shock raises output and the price level by about 1.2 percent and 0.8 percent, respectively, while reducing the unemployment rate by 0.5 percentage points. These results are robust to considering possible central bank information effects and allowing for an endogenous switch between the interest rate and the balance sheet tool at the effective lower bound. 

Publications

Policy Publications

Conference Proceedings 

Permanent Working Papers

Conference Discussions