Steven Pennings
Research Economist
Development Research Group
The World Bank
1818 H St. NW
Washington DC 20433 USA

Fields:  Macroeconomics, International Economics, Development Economics
Curriculum Vitae: (link to CV)


Cross-region transfers in a monetary union: Evidence from the US and implications for Europe Latest version: Jan 2016 [link to paper] [online appendix]
Transfers to individuals from the federal government vary greatly across states in the US, but are largely absent across countries in the European Monetary Union (EMU). Using exogenous variation in cross-state transfers as part of recent temporary stimulus packages and earlier permanent social security increases, I show that US states receiving larger transfers tend to have faster relative short-term growth in non-transfer income. The results are consistent with an open-economy New Keynesian model. Despite this, the model generates only a small reduction in output volatility if US-style countercyclical cross-region transfers are applied in Europe, especially when compared to the effects of locally-financed countercyclical transfers.

Pass-through of Competitors' Exchange Rates to US Import and Producer Prices
Journal of International Economics  (March 2017) [link]   (also World Bank Policy Research Working Paper 7926 [link to working paper] [online appendix])
This paper shows that in theory and BLS microdata, the prices of imported goods respond to the exchange rates (ER) of the producer's foreign competitors. In contrast, standard models have no role for competitors' ERs. Excluding the effects of competitors' exchange rates typically biases upwards estimates of bilateral exchange rate pass-through because competitors' ERs and bilateral ERs are positively correlated. A multi-country version of Atkeson and Burstein's (2008) industry aggregation model is able to explain a sizable proportion of pass-through of competitors' exchange rates to import prices, and also predicts pass-through of foreign competitors' prices and pass-through of competitors' ERs to US producer prices --- both of which are supported in the data. The results suggest that pass-through will be larger for ER movements shared by a greater fraction of foreign competitor countries.

When is the Government Transfer Multiplier Large? (joint with Eric Giambattista)  Latest version: August 2017 
Accepted at the European Economic Review (also World Bank Policy Research Working Paper 8184)  [link to working paper] [appendix
Transfers to individuals were a larger part of the 2009 US stimulus package than government purchases. Using a two-agent New Keynesian model, we show analytically that the multiplier on targeted transfers to financially constrained households is (i) larger than the purchase multiplier if the zero lower bound (ZLB) binds and (ii) is more sensitive to degree of monetary accommodation of inflation. Targeted transfers provide the same boost to demand as purchases, but lower aggregate supply relative to purchases, as those receiving transfers want to work less. When the aggregate demand curve inverts --- such as when the ZLB binds --- the extra inflation from lower supply boosts the multiplier. We show this result also holds quantitatively in a medium-scale version of the model.

The Seasonality of Conflict (joint with Jenny Guardado) Latest version: July 2017 [link to paper] [appendix]

Shrinking Dictators: how much economic growth can we attribute to national leaders? (joint with William Easterly) Latest: May 2017 [link]
(previous title "How Much Do Leaders Explain Growth? An Exercise in Growth Accounting" March 2015 [link])

Fiscal Consolidations and Growth: Does Speed Matter? (joint with Esther Perez Ruiz), [link]
IMF Working Paper 13/230 (November 2013); Media: Businessweek 

The impact of monetary policy on financial markets in small open economies: more or less effective during the financial crisis? (joint with Arief Ramayandi and Hsiao Chink Tang)
Journal of Macroeconomics 44 (June 2015), 60-70 [journal version]  [link to paper] [link to online appendix]

Private Business Investment in Australia (joint with Lynne Cockerell)
Reserve Bank of Australia Discussion Paper 2007-09

A long history of a short block: four centuries of development surprises on a single stretch of a New York City street (joint with William Easterly and Laura Freschi) 
Latest version: June 2016 [link]; Interactive website [link]; Media: Wall St JournalFinancial TimesMarginal Revolution, Wired

How much long-run economic growth happens at the country level? (with Diego Anzoategui and William Easterly) 
Work in progress Latest version: February 2016 [link]

Consumption Smoothing and Shock Persistence: Optimal Simple Fiscal Rules for Commodity Exporters (with Arthur Mendes)
World Bank Policy Research Working Paper 8035 (April 2017) [link to working paper]

Informality and Taxes in Mexico (joint with Eugenia Suarez)
Work in progress.