Felipe Schwartzman

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). 

Academic Work

Working Papers

(with Paul Ho and Pierre-Daniel Sarte, May 2024),


We study how international linkages and nominal price rigidities jointly shape the dynamics of inflation and output across multiple large economies. We describe how these features produce a global system of Phillips curves explicitly connected by multilateral trade relationships. In equilibrium, disturbances abroad propagate to domestic variables not only directly, through pairwise trade between countries, but also indirectly through third-country effects arising from the network structure of trade. The combined propagation mechanisms imply that country-specific shocks alone explain almost 90 percent of the observed average pairwise comovement in output growth between countries (...)

(with Esteban Rossi-Hansberg and Pierre-Daniel Sarte, December 2023),

Revision Requested - American Economic Journal: Macroeconomics

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 Toan Phan, December 2023)

Revision Requested - European Economic Review (Special Edition on Economics of Climate Change)

We analyze the relationship between climate-related disasters and sovereign debt crises using a model with capital accumulation, sovereign default, and disaster risk. We find that disaster risk and default risk together lead to slow post-disaster recovery and heightened borrowing costs. Calibrating the model to Mexico, we find that the increase in cyclone risk due to climate change leads to a welfare loss equivalent to a permanent 1% consumption drop. However, financial adaptation via catastrophe bonds and disaster insurance can reduce these losses by about 25%. Our study highlights the importance of financial frictions in analyzing climate change impacts.

(with Munseob Lee and Claudia Macaluso, October 2021)

How does monetary policy affect the real income volatility of Black and white households? We offer three insights: (i) targeting Black unemployment is equivalent to accepting larger inflation fluctuations; (ii) the effect of such a policy is summarized by two opposing forces, the unemployment effect and the prices effect; (iii) Black households are more exposed to both, as they experience higher unemployment risk and higher price volatility than white households. If inflation expectations become unanchored, the prices effect dominates, inflation rises, and the net effect of accommodative monetary policy for Black households’ is an increase in income volatility.

Published Papers

(with Christian Matthes, June 2023)

Conditionally Accepted -  American Economics Journal: Macroeconomics

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  Esteban Rossi-Hansberg and Pierre-Daniel SarteAmerican Economic Review - Papers and Proceedings (Volume 111, May 2021, Pages 40-57).  Ungated version.

We study the desirability of industrial policies that generate sectoral hubs using a quantitative spatial model with cognitive non-routine and other occupations. We find that the optimal policy gives rise to national hubs in coastal cities in tradeable services, like Professional Services, and smaller regional hubs in less tradable services, like Health and Education. Manufacturing is developed in smaller towns. 

(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 FulfordReview 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.

(with Carlos Carvalho). Journal of Monetary Economics (November 2015): 141-156. FRB-Richmond Working Paper Version- Download Technical Appendix. - Download Mathematica Files

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.

 Journal of Monetary Economics 68 (November 2014): 37-52. Ungated final version. FRB-Richmond Working Paper Version

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.

Unpublished Work

(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)

Publications in Portuguese

Estimativa de Curva de Phillips com Preços Desagregados Economia Aplicada v. 10, n.1 (jun-mar 2006), 137-145

Trabalho Infantil no Brasil (with Simon Schwartzman, 2004), International Labor Organization

Working Papers teste