research
WORK IN PROGRESS
"Frictional Fiscal Multiplier: From Micro to Macro” with Federico Huneeus, Raphael Schoenle and Michael Weber.
“Optimal Monetary and Fiscal Policies in Disaggregated Economies” with Lydia Cox, Jiacheng Feng, Gernot Muller, Raphael Schoenle and Michael Weber.
“Carbon Taxes and Misallocation” with Pete Klenow and Cian Ruane.
“Strike the Iron While It's Hot: Optimal Monetary Policy with (S,s) Pricing” with Peter Karadi, Anton Nakov, Galo Nuno and Dominik Thaler.
“Constructing Counterfactuals for Markup Distributions” with Boragan Aruoba, Felipe Saffie and Frank Schorfheide.
WORKING PAPERS
[3] “Pricing under Distress” with Andres Fernandez, Boragan Aruoba, Daniel Guzman and Felipe Saffie. Lastest version: January 2024. Revision requested.
Supermarkets' prices become more sticky during the Chile's riots of 2019. A news uncertainty shock rationalizes this finding in a menu cost model, implying stronger leverage of monetary policy on the real economy. Critical for this result is the 'news' nature of uncertainty shocks.
[2] “Monetary Policy Surprises in Chile: Measurement and Real Effects” with Andres Fernandez, Boragan Aruoba, Daniel Guzman and Felipe Saffie. Lastest version: August 2021.
We discuss the properties of alternative measures of monetary policy shocks in Chile, choose one, and study its implied IRFs.
[1] “Coordination of Expectations and the Informational Role of Policy” with Yang K. Lu. Lastest version: June 2009.
Policy has leverage on the dynamics of self-fulfilling profecies by distorting the informational content of aggregate history.
PUBLICATIONS
[11] “Big G” with Lydia Cox, Gernot Muller, Raphael Schoenle and Michael Weber. Forthcoming, Journal of Political Economy. [DATA]
The macro effect of Government's real demand is much richer than just "Big G." Using the universe of procurement contracts signed by the US Federal Government, we document new facts and argue that they do matter for macro.
[10] “Measuring the Redistributive Effects of Monetary Policy: An Application to the Chilean Economy” with Emiliano Luttini and Elisa Rubbo. Contributed to the proceedings of the XXV Annual Conference of the Central Bank of Chile (in preparation).
We use a rich multi-sector New Keynesian model to study the effects of monetary policy across different demographic groups. The response of employment ranges from 0.7 (for middle-age, middle-income men) to 5.4 (for high-income men over 54).
[9] “Sectoral Heterogeneity in Nominal Price Rigidity and the Origin of Aggregate Fluctuations” with Raphael Schoenle and Michael Weber. American Economic Journal: Macroeconomics vol. 16, no. 2 (April 2024), pp: 318-352.
Heterogeneity in nominal rigidity gives rise to a "frictional origin" of aggregate fluctuations from idiosyncratic shocks that interacts with those steaming from the distribution of sectoral size or centrality in the production network.
[8] “The Real Effects of Monetary Shocks: Evidence from Micro Pricing Moments” with Gee Hee Hong, Matt Klepacz and Raphael Schoenle. Journal of Monetary Economics vol. 139 (Oct 2023), pp: 1-20 [LEAD ARTICLE; BEST PAPER OF THE YEAR AT THE JME].
Only frequency robustly relates to responsiveness of prices to monetary shocks in U.S. data. In contrast to Alvarez, Le Bihan and Lippi (AER 2016), we find no evidence of a sufficient statistic. We show that our main empirical results are consistent with a quantitative menu cost model.
[7] “The Propagation of Monetary Shocks in a Heterogeneous Production Economy” with Raphael Schoenle and Michael Weber. Journal of Monetary Economics vol. 116 (Dec. 2020), pp. 1-22 [LEAD ARTICLE, DATA ON SECTORAL FREQUENCY OF PRICE CHANGES ].
Monetary non-neutrality depends on the joint sectorial distribution of price stickiness, GDP shares and input-output linkages. Quantitatively, the first is most important while the third contributes little.
[6] “Prudential Policies and Bailouts: A Delicate Interaction.” Review of Economic Dynamics vol. 38 (Oct. 2020), pp. 181-197.
Prudential policies may backfire by exacerbating the lack of commitment problem of bailouts.
[5] “Optimal Reputation Building in the New Keynesian Model” with Robert G. King and Yang K. Lu. Journal of Monetary Economics vol. 84 (Dec. 2016), pp. 233-249.
How should a central bank set a policy plan when agents are sckeptical whether this plan will be carried out in the future? Very carefully!
[4] “Rational Inattention, Multi-Product Firms, and the Neutrality of Money” with Raphael Schoenle. Journal of Monetary Economics vol. 80 (June 2016), pp. 1-16 [LEAD ARTICLE].
Economies of scope in information processing naturally arise in the rational inattention model when firms price multiple goods, which substantially undermine the strenght of monetary non-neutrality predicted by the model.
[3] “Managing Expectations” with Robert G. King and Yang K. Lu. Journal of Money, Credit and Banking, Dec. 2008.
Optimal committed monetary policy is studied when credibility is imperfect and endogenous in the Barro-Gordon world.
[2] “Corporate Governance in Chile” (with Manuel Agosin). In: OECD-Paris, “Corporate Governance in Development: Experiences from Brazil, Chile, India and South Africa” (edited by Charles Oman). 2004.
Pension Funds Management Agencies play the key role of defenders of small shareholders in Chile, where large blockholders have all the power inside companies.
[1] “Beveridge Curve, Vacancies and Unemployment: Chile, 1986-2002” (with Dolly Bellani and Pablo García). Revista de Economía Chilena, Dec. 2003.
The Mortensen-Pissarides model is estimated for Chile's main cities using a time series of vacancies constructed from newspapers. The model fits the data quite well (but not perfect.)
BOOKS / CONFERENCE VOLUMES
[2] "Independence, Credibility and Communication of Central Banking" edited with Ricardo Reis. 2021. Proceedings of the XXIII Annual Conference of the Central Bank of Chile.
[1] "Monetary Policy and Global Spillovers: Mechanisms, Effects and Policy Measures" edited with Enrique G. Mendoza and Diego Saravia. 2017. Proceedings of the XX Annual Conference of the Central Bank of Chile.