Research                                                                                                                 

Job Market Paper:

• Reconciling Wage and Price Phillips Curves 

Contrary to the traditional Phillips Curve, the data suggests that the Price Phillips Curve steepens in excess of the Wage Phillips Curve during especially tight labor markets. I provide evidence for this excess steepening on US aggregate and cross-sectional data as well as on a cross-section of developed countries. I trace this excess steepening to employers’ resistance to raising wages due to downward nominal wage rigidity. Thus, the channel is closely related to Kudlyak’s User Cost of Labor. I introduce the channel into a NK-SAM framework with monopsony power and downward nominal wage rigidity, and show how it leads to the non-linear steepening of the Price Phillips Curve during especially tight labor markets. The excess steepening of the Price Phillips Curve is of particular interest for monetary policy due to its implications for a painless disinflation. Additionally, the resulting decrease in real wage growth during especially tight labor markets yields a labor market target region to foster real wage growth.

Working Papers:

• Geopolitical Risk and Import Dynamics - Evidence from US Customs Data (with M. Khalil & F. Strobel)

In recent years, major exporting economies have experienced rising geopolitical risk. Taking the perspectives of the US and the euro area, we employ a detailed product data panel to study the consequences of trading-partner geopolitical risk shocks on domestic imports. We find that, on average, trading-partner geopolitical risk shocks lower import volumes and raise import prices. The decline in imports is particularly strong when geopolitical risk shocks hit countries that exhibit a greater geopolitical distance to the US and the euro area, or when geopolitical risk shocks hit countries, which are under US sanctions. A case in point are large effects for geopolitical risk shocks in China. Thus, increasing geopolitical risk triggers dynamics that may eventually lead to a fragmentation of global trade.

• Uncertainty and the Dislike of Inflation - Evidence from Retirement Insecurity

Survey evidence shows that people dislike inflation due to the short-term loss of real income and uncertainty about future living standards. While previous research has mainly focused on the small short-term income effect, this study also examines the impact of inflation uncertainty using data from the Michigan Survey of Consumers. It finds that both expected inflation and inflation uncertainty negatively affect future living conditions, with uncertainty playing the more significant role. The effect of inflation uncertainty is comparable to expecting a substantial real income drop, a 21 percentage point increase in the probability of job loss, or a 7 percentage point rise in expected inflation. These findings highlight that inflation uncertainty significantly influences expectations of long-term living standards, and should be considered when assessing the public's dislike of inflation.

• International Evidence for Non-Linear Phillips Curves - The Roles of Market Concentration and Migration 

This paper is the first to test labor market tightness-based Phillips Curves in a cross-country panel estimation. I find evidence for the non-linearity of both Price and Wage Phillips Curves. The non-linearity of the Price Phillips Curve is crucially driven by Market Concentration. The non-linearity of the Wage Phillips Curve is also heavily influenced by market concentration, albeit in the opposite direction. Finally, I find that international migration into a country also flattens the otherwise steeply rising Wage Phillips Curve. 

 Research in Progress:

• Reconciling Pandemic Inflation Narratives

I reconcile the diverging pandemic inflation narratives of Bernanke & Blanchard (2023) and Ball, Leigh, & Mishra (2022). One key aspect is allowing for the direct impact of labor market tightness on inflation.  I am currently working on estimating the relative importance of their Phillips Curve Channel with the Supply Shock narrative, as exemplified by  Benigno et al (2022). The ultimate goal of this project is to holistically calculate the relative importance of the varying narratives, including the fiscal theory of inflation, the quantity of money view and the greed-flation hypothesis.

• To shift or not to shift: Dynamics of the Beveridge Curve 

We explore the Beveridge Curve and its shifts based on the Blanchard-Diamond (1989) - Benati-Lubik (2013) framework of two salient shocks: activity and matching shocks. We explore the recent shift during the pandemic in particular. To this end we use sectoral and state level Beverdige Curves. We highlight the importance of pandemic related restrictions and labor supply shocks. States with less stringent Covid restrictions saw a smaller shift of the Beveridge Curve than states with stronger restrictions. Further, sectors unaffected by restrictions and infection risk saw only minimal shifts in the Beveridge Curve, whereas client facing industries saw sizeable Beveridge Curve shifts. We conclude by proposing an extension to the BDBL framework to analyze how Beveridge Curve shifts affect inflation and thus the shape of the Phillips Curve.