I am a senior economist at the Richmond Fed. Most of my research focuses on identifying the causes of business cycle, or detailing transmission mechanisms, with an eye to heterogeneity. Some of my more recent work also focuses on spatial and urban economics.
I am also currently in charge of the economics section of the International Society for Inventory Research and in the editorial board for the BE Journal of Macroeconomics and for the Brazilian Economics Review (Revista Brasileira de Economia).
Work in Progress
(with Claudia Macaluso, April 2021)
We study a medium-sized New Keynesian model with unemployment and heterogeneous agents. We find that changing the monetary authority’s mandate to explicitly respond to Black unemployment results in no appreciable change in the volatility of consumption for either Black or white households. On the other hand, a more accommodating monetary policy stance is able to counteract consumption fluctuations for Black individuals, though at the cost of higher volatility in aggregate inflation.
We analytically and quantitatively characterize the effects of this climate default risk through a small-open-economy model with strategic sovereign default and capital, calibrated to empirical estimates of economic damages from tropical cyclones. We analyze the welfare gains from financial adaptation including the use of disaster insurance, and of catastrophe bonds.
(with Esteban Rossi-Hansberg and Pierre-Daniel Sarte, December 2020), Data Appendix, NBER Working Paper 26267. See related summary for general audience, "Optimizing the geography of occupations across U.S. cities", and VOX-EU column "Optimal policy responses to the growing polarisation of occupations in space"
In the U.S., cognitive non-routine (CNR) occupations are disproportionately represented in large cities. We propose and quantify a spatial equilibrium model with multiple industries employing CNR and non-CNR occupations. An optimal policy that benefits workers equally incentivizes the formation of cognitive hubs in the largest cities and higher overall activity and employment in smaller cities.
(with Christian Matthes, May 2020)
We use sectoral data to measure the impact of household consumption shocks on aggregate fluctuations. Shocks independently affecting household consumption demand have accounted for almost 40% of business cycle fluctuations since the mid-1970s, playing a central role in recessions within that period.
(with Saroj Bhattarai and Choongryul Yang), Journal of Monetary Economics (Volume 119, April 2021 Pages 40-57). FRB-Richmond Working Paper Version. See related coverage in Richmond Fed's Economic Brief with Tim Sablik
We show that the 2006-09 U.S. housing crisis had scarring local effects. For a given county, a housing shock generating a 10 percent reduction in housing wealth from 2006 through 2009 led to a 4.4 percent decline in employment by 2018 and a commensurate decline in value added. Local wages did not respond, and convergence in the local labor market slack took place entirely through population losses in affected regions.
(with Scott Fulford) Review of Economics and Statistics (July 2020), 102(3): 600-616 FRB-Richmond Working Paper Version. - Download Online Appendix - Download Replication Files. Formerly "The Benefits of Commitment to a Currency Peg: The Gold Standard, National Banks and the 1896 U.S. Presidential Election". See related coverage in Richmond Fed's Economic Brief, with Karl Rhodes
We use the one-time cross-sectional impact of a cleanly identified shock to identify its aggregate impact. The U.S. presidential election in 1896 provides a cleanly identified positive shock to commitment to the gold standard. Full commitment would have reduced the volatility of real activity over two decades, and mitigate the 1893 economic depression,
(with Kartik Athreya and Andrew Owens) Quantitative Economics (November 2017), 8: 761–808. FRB-Richmond Working Paper Version. See related coverage in Richmond Fed's Economic Brief, with Jessie Romero.
The direction and size of the output effects of transfers to poorer households depend on labor supply decisions. In a quantitative incomplete‐markets model extended to allow for nominal rigidities, wealth redistribution leads to a temporary boom in consumption but negligeable output increase. Our results suggest substantial value in empirical research uncovering the distribution of marginal propensities to work.
For a given frequency of price adjustment, monetary non-neutrality is smaller if older prices are disproportionately more likely to change. Selection for older prices is weaker and non-neutralities are larger if the hazard function of price adjustment is less strongly increasing, if there is heterogeneity in price stickiness, and if durations of price spells are more variable. The Taylor (1979) model exhibits maximal selection for older prices, whereas the Calvo (1983) model exhibits no selection.
(with Pierre-Daniel Sarte and Thomas Lubik). Journal of Monetary Economics (November 2015): 264-283. FRB-Richmond Working Paper Version Download Supplementary Material. See related coverage in Richmond Fed's Economic Brief, with Karl Rhodes.
Beginning in the mid-1980s, U.S. business cycles changed in the comovement and relative volatilities of labor productivity, hours, output, and inventories. Inventories provide additional insight relative to aggregate investment regarding firms׳ intertemporal decisions. We show that variations in the discount factor estimated using inventories play a key role in explaining the shifts in U.S. business cycles.
After emerging market crises, value added falls more in manufacturing industries that normally exhibit higher inventory/cost ratios, persisting years into the recovery. A shock to aggregate TFP cannot by itself match this pattern, but a persistent increase in the cost of foreign capital can. In the context of a calibrated multisector small open economy model, a shock to the cost of foreign capital consistent with the cross-industry data leads, 3–5 years afterwards, to an average reduction of output relative to a trend of 5.4 percent.
(with Marianna Kudlyack, Revised June 2012) Richmond Fed Working Paper 12-04
We conduct an accounting exercise of the role of worker flows between unemployment, employment, and labor force nonparticipation in the dynamics of the aggregate unemployment rate across four recent recessions: 1982-1983, 1990-1991, 2001, and 2007-2009 (the "Great Recession"). We show that, whereas during earlier recessions it was sufficient to examine the flows between employment and unemployment to account for the dynamics of the unemployment rate, this was not true in the Great Recession. The increased importance of the flows between nonparticipation and unemployment is documented across all age and gender groups.
(with Carlos Carvalho). Revised 2008 (key results subsumed into "Selection and Monetary Non-Neutrality in Time-Dependent Pricing Models")
Federal Reserve Bank Publications (Economic Quarterly and Economic Briefs)
Public and Private Debt after the Pandemic and Policy Normalization with Thomas Lubik (Economic Brief)
Inflation Target Zones as a Commitment Mechanism (Third Quarter 2020)
Inequality Across and Within US Cities around the Turn of the Twenty-First Century (First-Fourth Quarter 2017) See related coverage in Richmond Fed's Economic Brief, with Jessie Romero.
The Heterogeneous Business Cycle Behavior of Industrial Production (Third Quarter 2016) with Jackson Evert
How Can Consumption-Based Asset-Pricing Models Explain Low Interest Rates? (Third Quarter 2014)
The Business Cycle Behavior of Working Capital (Fourth Quarter 2013)
When Do Credit Frictions Matter for Business Cycles? (Third Quarter 2012)
Publications in Portuguese
Estimativa de Curva de Phillips com Preços Desagregados Economia Aplicada v. 10, n.1 (jun-mar 2006), 137-145