Contact Information

Phone: (617) 973-3089

Mailing Address

Federal Reserve Bank of Boston
Research Department, T-9
600 Atlantic Ave
Boston, MA 02210

CV


About Me

I am an economist in the research department at the Federal Reserve Bank of Boston. My research is primarily focused on macroeconomic issues such as the price-setting behavior of firms, the effectiveness of monetary and fiscal policy, exchange-rate dynamics, and global imbalances. I am also broadly interested in applied time-series analysis and macroeconomic history. I hold a Ph.D. degree in economics from the University of California, Berkeley.

Publications

"Price Setting in Online Markets: Does IT Click?" (accepted for publication at the Journal of the European Economic Association)
with Yuriy Gorodnichenko (UC Berkeley) and Oleksandr Talavera (Swansea University, U.K.)
Previous versions: NBERBoston Fed WP,
pdf
In media: VoxEU, PBS


Working papers

"Inflation Expectations and Nonlinearities in the Phillips Curve" (October 2017; pdf)
            with Alexander Doser (Boston Fed), Ricardo Nunes (University of Surrey, U.K.), and Nikhil Rao (Boston Fed)
Abstract: This paper shows that a simple form of nonlinearity in the Phillips curve can explain why, following the Great Recession, inflation did not decrease as much as predicted by linear Phillips curves, a phenomenon known as the missing disinflation. We estimate a piecewise-linear specification and document that the data favor a model with two regions, with the response of inflation to an increase in unemployment slower in the region where unemployment is already high. Nonlinearities remain important even when we account for other factors proposed in the literature, such as consumer expectations of inflation or financial frictions. However, studying a range of specifications with different measures of inflation and economic activity, we conclude that, in most cases, consumer expectations are more robust than nonlinearities. We find that the role of consumer expectations was especially important in the 1970s and ’80s, during a turbulent rise in inflation followed by the Volcker disinflation; the nonlinearities make disinflation more problematic and require the inflation expectations process to be more forward-looking during this period, thereby putting a larger weight on survey expectations. We conclude that a nonlinear Phillips curve with forward-looking survey expectations can be a useful tool to understand inflation dynamics during episodes of rapid disinflation and persistent inflation.


with Wataru Miyamoto (Bank of Canada) and Thuy Lan Nguyen (Santa Clara University)
Other versions: Boston Fed WP (October 2016)
Abstract: Using panel data on military spending for 125 countries, we document new facts about the effects of changes in government purchases on the real exchange rate, consumption, and current accounts in both advanced and developing countries. While an increase in government purchases causes real exchange rates to appreciate and increases consumption significantly in developing countries, it causes real exchange rates to depreciate and decreases consumption in advanced countries. The current account deteriorates in both groups of countries. These findings are not consistent with standard international business-cycle models. We propose potential sources of the differences between advanced and developing countries in the responses to spending shocks.
Presented: Econometric Society European meeting (Lisbon, Portugal), International Association for Applied Econometrics (Sapporo, Japan), Society for Economic Dynamics (Edinburgh, U.K.), Keio University, Econometric Society Asia meeting (Hong Kong), Midwest macro (Louisiana State University), Bank of Canada, FRS international economic analysis (El Paso, TX) and macro (San Antonio, TX), West Coast Workshop in International Finance (Santa Clara University), Vanderbilt University, World Bank, Econometric Society Asia meeting (Kyoto, Japan), International Monetary Fund


with Sandra Spirovska (University of Wisconsin, Madison)
Old version: Boston Fed WP 
Abstract: Using 25 years of military spending data for more than a hundred countries, this paper provides new evidence on the effect of government spending on output. Following a popular assumption that military spending is unlikely to respond to output at business-cycle frequencies—and exploiting variation in military spending of a significantly larger magnitude than in the previous literature based on U.S. data—we find that the government spending multiplier on impact is in the range 0.6–0.7, rising to 0.9 over a 2–3 year horizon. The multiplier is especially large in recessions, under a fixed exchange rate, and when the government purchases durables. We also document substantial heterogeneity across countries, with the spending multiplier larger in advanced economies. These findings suggest that the effectiveness of fiscal policy depends largely on the economic environment and policy implementation.
Presented: Day-Ahead FRS meeting on fiscal policy (San Antonio, TX), Computing in Economics and Finance (Bordeaux, France); FRS macro meeting (Nashville, TN); UC Berkeley GEMS


Abstract: In macroeconomic models, the level of price dispersion—which is typically approximated through its relationship with inflation—is a central determinant of welfare, the cost of business cycles, the optimal rate of inflation, and the tradeoff between inflation and output stability. While the comovement of price dispersion and inflation implied by standard models is positive, I find that in the data, it is negative. This is due to transitory price changes (sales): if sales are removed from the data, the comovement of price dispersion and inflation turns positive. Nevertheless, I show that a wide variety of price-stickiness models that ignore sales cannot quantitatively match the comovement even for regular prices. Modeling sales explicitly helps to reconcile theory with the data for posted and regular prices simultaneously, altering the dynamics of output response to monetary shocks. Finally, I show that models that fail to match the degree of the comovement in the data can significantly mismeasure welfare, the cost of business cycles, and the optimal inflation rate.
Presented: University of North Carolina, Chapel Hill; Bank of Canada; Federal Reserve Bank of Boston; Simon Fraser University; University of Illinois, Urbana-Champaign; Federal Reserve Bank of Cleveland; Cornerstone Research (Washington, DC); College of William and Mary; Vanderbilt University; University of California, Irvine; University of Hawaii, Manoa; University of California, Berkeley

            with María José Luengo-Prado (Boston Fed) and Nikhil Rao (Boston Fed)
Abstract: Using sectoral data at a medium level of aggregation, we find that price changes became less responsive to aggregate unemployment around 2009–2010. The slopes of the disaggregated Phillips curves diminished in many sectors, including housing and some services. We also document a decrease in sectoral inflation persistence, suggesting an increase in the weight of the forward-looking inflation expectation component and a decrease in the weight of the backward-looking component.


Disclaimer: The views expressed herein are not necessarily those of the Federal Reserve Bank of Boston nor the Federal Reserve System.