Cooper Howes

I am an economist at the Federal Reserve Board of Governors. My research focuses on topics in macroeconomics and finance.

Please feel free to email me: cooperhowes11 [at] gmail [dot] com

Working papers

Financial Constraints, Sectoral Heterogeneity, and the Cyclicality of Investment

While investment in most sectors declines in response to a contractionary monetary policy shock, investment in the manufacturing sector increases. Using manually digitized aggregate income and balance sheet data for the universe of US manufacturing firms, I show this increase is driven by the types of firms which are least likely to be financially constrained. A two-sector New Keynesian model with financial frictions can match these facts; unconstrained firms take advantage of the decline in the user cost of capital caused by the monetary contraction, while constrained firms are forced to cut back. Removing firm financial constraints in the model dampens the response of aggregate output to monetary shocks by about 25%.

Bank Information Production Over the Business Cycle (With Gregory Weitzner)

The information banks have about borrowers drives their lending decisions and macroeconomic outcomes, but this information is inherently difficult to analyze because it is private. We construct a novel measure of bank information quality from confidential regulatory data that include banks' private risk assessments for US corporate loans. We show that our measure of information quality improves as local economic conditions deteriorate, particularly for newly originated loans and loans with greater information sensitivity. Our results provide empirical support for theories of countercyclical information production in credit markets, and suggest that policies designed to stimulate macroeconomic activity through the banking sector may be less effective in recessions.

The Aggregate Effects of Targeted Tax Cuts

This paper analyzes how different types of tax changes can have different economic impacts. Using Congressional records, I decompose the plausibly exogenous legislative provisions identified in Romer and Romer (2010) into one of five categories: business marginal rate provisions, business investment incentives, other business provisions, individual marginal rate provisions, and other individual provisions. I find that the effects differ crucially depending on which types of taxes are being cut. I use my results to analyze the effects of the Tax Cuts and Jobs Act of 2017 and estimate the Act will boost GDP growth by an average of between 1.4-2.3 percentage points per year from 2018 through 2020. This is significantly higher than most existing estimates of the near-term effects; while the Act's relative permanence and its distributional considerations suggest that these numbers should be thought of as an upper bound, they also support the idea that other estimates are understating the stimulative effects of the Act by not fully accounting for its composition.

Work in progress

What Do We Learn from Reading Every FOMC Transcript? (With Olivier Coibion, Marc Dordal i Carreras, and Yuriy Gorodnichenko) [Slides]

Tax Shocks and Financial Heterogeneity (With Choongryul Yang)

Financial Deepening, Investment Volatility, and the Great Moderation

Non-refereed publications

Monetary Policy and Intangible Investment (With Alice von Ende-Becker), Federal Reserve Bank of Kansas City Economic Review (2022)

Inflation in 1972: A Cautionary Tale, Federal Reserve Bank of Kansas City Economic Bulletin (2022)

Barclays Research reports on student loans (available upon request)

  • The Dark Side of "Good" Debt (2012), An Educated Mess (2012), A Closer Look at the Great Rate Debate (2013)

  • Media coverage: New York Times, Politico, Reuters