Research
Research Interests
Household Finance, Behavioral Finance, Fake News, Housing Markets, Gender Economics.
My research is question driven with a focus on household finance, behavioral finance, financial stability, and macro-finance. I aim to provide new and innovative perspectives on questions that are central to contemporary policymakers: origins of housing bubbles and motivations for housing investment, drivers of households’ inflation expectations and financial decisions, household’s economic (long-term) reaction to the pandemic. Currently, I work intensively on the implications of fake news for the financial system and the economy as a whole. More generally, my research investigates how economic agents take decisions at the micro-level, the implications of these decisions for financial fluctuations, the financial system, the macroeconomy, and what this means for policy. This often involves as a first step obtaining novel data at the micro-level (e.g., conducting representative large-scale surveys and laboratory, survey or field experiments). In a second step, I use the new micro-data to understand resulting patterns that are relevant at the aggregate (finance/macro) level. This approach allows to build theoretical models (founded by empirical micro-evidence) and to conduct simulations for the sake of evaluating policy. In summary, I use and combine model-based theoretical approaches (OLG-models, DSGE-models, simulations, VARs) and behavior-based empirical approaches (survey and experimental data analysis).
Click here for my Google Scholar Profile.
Publications
[7] Learning in a Complex World: Insights from an OLG Experiment (with Cars Hommes and Daria Minina and Isabelle Salle), Journal of Economic Behavior & Organization (2024), Volume 220, pp. 813-837 [Journal Version, WP].
[6] Gender Norms and The Gender Gap in Higher Education (with Hannah Paule-Paludkiewicz), Labour Economics (2024), Volumne 87. ECONtribute Discussion Paper (2023), No. 253 [Journal Version, WP].
[5] Reproducibility in Management Science, Management Science (2023) [Journal Version]. (with Fišar, M., Greiner, B., Huber, C., Katok, E., Ozkes, A., and the Management Science Reproducibility Collaboration). Note: Member of the Management Science Reproducibility Collaboration.
[4] Nevertheless, they persist: Cross-country differences in homeownership behavior (with Tobias Schmidt), Journal of Housing Economics (2022), Volume 55. Deutsche Bundesbank Discussion Paper, 2019, no.40 [Journal Version, Older WP]. Media coverage: Central Banking (November, 26th, 2019).
[3] The COVID-19 consumption game changer: Evidence from a large-scale multi-country survey (with Alexander Hodbod and Cars Hommes and Isabelle Salle), European Economic Review (2021), Volume 140. ECB Working Paper (2021), No. 2599; Covid Economics, Vetted and Real-Time Papers (2020), Issue 59, pp. 40-76 [Journal Version, WP]. Media coverage: CEPR VideoVox; VoxEU Column; El Confidencial (December, 30th, 2020); Santander Insights (December, 30th, 2020); Dziennik Gazeta Prawna (December, 31st, 2020); Barcelona GSE Voice (January, 26th, 2021); Bloomberg (October, 7th, 2021); MarketWatch (October, 11th, 2021); Gestión (October, 11th, 2021); Bloomberg (October, 17th, 2021); ESB, weekly policy journal for Dutch economists (January, 12th, 2022).
[2] Gender Differences in Private and Public Goal Setting (with Jordi Brandts, Sabrine El Baroudi and Christina Rott), Journal of Economic Behavior & Organization (2021), Volume 192, pp. 222-247. Tinbergen Institute Discussion Paper, 2022-008/II [Journal Version, WP].
[1] Sectoral Risk Weights and Macroprudential Policy (with Alexander Hodbod and Konstantin Vasilev), Journal of Banking & Finance (2020), Volume 112 [Journal Version]. Media coverage: ECB board member Pentti Hakkarainen's speech "Banks in shackles - myth or reality?" (October, 2nd, 2018); Barcelona GSE Voice (February, 24th, 2020).
Working Papers
From Buzz to Bust: How Fake News Shapes the Business Cycle
with Tiziana Assenza and Fabrice Collard and Patrick Fève. CEPR Discussion Paper #18912, March 2024 [Working Paper]; Media coverage: VoxEU Column; BSE Voice; General-Anzeiger Bonn; Bonn Press Release and Podcast: VoxTalks Economics.
The proliferation of fake news raises concerns about its potential impact on economic stability. This paper explores this question, focusing on the macroeconomic effects of fake technological news in the US for the period 2007-2022. We use fact-checked news to build a proxy for the exogenous variation in fake news issuance. Adopting a proxy-VAR approach, we show that fake technological news increases the macroeconomic uncertainty, exacerbates unemployment, and depresses industrial production. Similar effects are observed for fake news related to the supply side (tax rates, price of gas). In contrast we find no significant impact from fake news pertaining to government finance, market regulation, or the labor market. Moreover, fake news conveying negative information about technological developments exhibit stronger depressive impacts than positive ones.
Fake News: Susceptibility, Awareness and Solutions
with Tiziana Assenza and Alberto Cardaci. TSE Working Paper #1519, March 2024 [Working Paper]; Media coverage: VoxEU Column; BSE Voice; General-Anzeiger Bonn; Bonn Press Release.
This paper investigates and quantifies citizens' vulnerability to fake news and assesses, using a randomized control trial, the effectiveness of a policy intervention aimed at raising awareness and reducing the prevalence of misinformation. We find that the average US American lacks proficiency in identifying fake news and harbors an inflated perception of their ability to differentiate between true and fabricated news content. Giving individuals feedback on their ability to assess the accuracy of news items causally adjusts their beliefs about their fake news detection ability. Most importantly, we show that the simple intervention of informing citizens about their personal susceptibility to fake news causally enhances their willingness to pay for the service of fact-checking.
Housing Consumption and Bubble Size [reject & resubmit at Econometrica]
with Christina Rott and Giovanni Giusti (latest version: June 2022; pdf)
This paper identifies a novel determinant of the magnitude of house price bubbles: the demand for housing consumption. We investigate the role of this factor with an innovative experimental design that allows modeling the consumption side along with the investment side of housing. The overlapping generation structure and the endogenous dividend (rental income) and fundamental value of the real estate asset make our experimental design a credible framework for studying house price bubbles. The results show that the demand for housing consumption affects the fundamental value of the real estate positively and dampens the house price bubble size.
The pass-through from Inflation Perceptions to Inflation Expectations
with Tobias Schmidt and Daria Minina (Deutsche Bundesbank Discussion Paper, 2023, [Working Paper]; Media coverage: Policy Brief for the European Money and Finance Forum SUERF Policy Brief, No 396, August 2022).
This paper documents a strong relationship between households’ perceptions about inflation over the past 12 months and households’ short- and long-term expectations about future inflation. This relationship is strong during periods of high-inflation but even stronger during low-inflation periods. We establish a causal relationship by implementing a randomized information provision experiment in a large and representative survey to generate an exogenous variation in inflation perceptions. Our results show that household perceptions about past inflation drive their expectations about future inflation rates. The strength of the pass-through from perceptions to expectations varies across socioeconomic groups. We identify two critical moderating factors for this heterogeneity; differences in individual uncertainty about future inflation and information acquisition. Further, we show that the large majority of households rely on their shopping experience when forming their perceptions about past inflation and pay particular attention to food and fuel prices. The shopping experience affects inflation expectations indirectly—through perceptions.
SHE can't afford it and HE doesn't want it: The gender gap in the COVID-19 consumption response
Tinbergen Institute Discussion Paper, 22-029/II; [Working Paper]. Media coverage: VoxEU Column.
This paper explores whether and why the pandemic differentially altered women's and men's consumption behavior. After the 2020 wave of lockdown restrictions were lifted, women reduced consumption more than men compared to their pre-pandemic levels. Data on self-reported reasons for consuming less reveals that gender differences in infection risk aversion and precautionary saving motives are minor. This paper finds considerable gender differences in reporting affordability constraints and consumer preference shifts. Women report financial constraints more frequently. Men adapted more to the limited consumption possibilities during the lockdown and frequently reported "not missing" various items as the primary reason for spending less than pre-pandemic. These differences are significant for subsamples such as singles and those living with their partner.
Preference for Housing Services and Rational Housing Bubbles
Best Student Paper Award 2016, INFINITI Conference on International Finance; (latest version: January 2018, pdf; expected submission date H1/2023).
There is a strong negative cross-country correlation between the share of consumption that households spend on housing services and house price bubbles. Countries that spend less on housing services as a share of total consumption, experienced significantly more house price booms and busts during the period 1970 - 2014, and the associated housing boom-bust cycles were larger and more volatile. This paper proposes an overlapping generation (OLG) model that replicates these facts by separating the consumption and investment side of a real estate asset. Two main results emerge from the analysis of the model. First, when agents have weaker preferences for housing services (and hence this model economy will be characterized by lower consumption shares for housing services), the economy is more prone to experience house price bubbles. Second, and conditional on house price bubble existence, the economy will face larger house price bubbles. The model offers novel policy implications. While help-to-buy schemes make the economy more bubble-prone, rental subsidies are an effective tool to reduce the prevalence of house price bubbles.
Work in Progress
[1] Fake News and Financial Markets (with Tiziana Assenza and Fabrice Collard and Patrick Fève)
[2] Fake News and AI adoption: The Firm’s Perspective (with Tiziana Assenza and Fabrice Collard and Patrick Fève and Tobias Schmidt)
[3] Inflation Expectations and Durable Consumption: Reconciling Conflicting Evidence (with Tiziana Assenza and Anna Mogilevskaja and Tobias Schmidt)
[4] Recent Developments in the German Labor Market: Hours worked, Reshuffle, Resignation, Long-Covid (with Tiziana Assenza and Anna Mogilevskaja)
[5] Animal Spirits and Endogenous Cycles: New Empirical Evidence (slides available on request, with Angela Fiedler)
Older Work (currently sleeping)
Housing Booms and Busts: Convergence and Divergence in OECD countries
(latest version: January 2020; paper available on request)
This paper explores the long run relationship between homeownership rates, expenditure shares for housing services and house price fluctuations across countries. First, I provide a comprehensive empirical characterization of housing cycles using a large database covering 18 industrialized countries over the period 1970:1-2013:4. Second, the interaction between homeownership, expenditure shares for housing services, real estate specific credit variables and house price fluctuations is investigated. Four novel stylized facts are identified across countries: homeownership rates are (1) highly negatively correlated with the expenditure shares for housing services, highly positively correlated with (2) the frequency and (3) the intensity, but uncorrelated with (4) the amplitude of independent housing booms and boom-bust cycles. By contrast, LTV and Mortgage-to-GDP ratios, cannot explain cross-country differences in the frequency and intensity of independent housing booms and boom-bust cycles.
Heterogeneous Firms, Financial Frictions and the Business Cycle
Sales growth rates of small firms are systematically different from those of large firms along the business cycle: (1) in the beginning of booms, small firms grow faster relative to large firms, (2) at the end of booms, large firms grow faster than small firms, (3) in the beginning of recessions, small firms decline sharply relative to large firms, and (4) at the end of recessions, small firms have less negative growth relative to large firms. The underlying drivers of these patterns remain an open question. To my knowledge, no theoretical framework exists that explains and replicates the observed facts in the data. The contribution of this paper is to provide such a theoretical framework by developing a heterogeneous firms model with endogenous exit and financial frictions. The model is calibrated to US data and is capable of closely replicating the reported variation of the differential growth rate between large and small firms over the business cycle. The model features two types of financial market imperfections. First, firms have access to defaultable debt, which generates endogenous credit constraints. Second, a fixed screening cost is charged by financial intermediaries when issuing new credit. Interestingly, the two financial frictions have an asymmetric impact. The fixed cost explains more of the differential growth rate between large and small firms during recessions. During boom phases, most of the differential growth rate is picked up by the default-option friction.