Research

Refereed Journal Articles

• Fixed-Wage Contracts and Monetary Non-Neutrality  -- with Mikael Carlsson and Oskar Nordström Skans  2019,  American Economic Journal: Macroeconomics, 11 (2): 171-92.

Abstract: We study the importance of wage rigidities for the monetary policy transmission mechanism. Using uniquely rich micro data on Swedish wage negotiations, we isolate periods when the labor market is covered by fixed wage contracts. Importantly, negotiations are coordinated in time but their seasonal patterns are far from deterministic. Using a two-regime VAR model, we document that monetary policy shocks have a larger impact on production during fixed wage episodes as compared to the average response. The results do not seem to be driven by the periodic structure, nor the seasonality, of the renegotiation episodes. 

Working Papers 

• Monetary Policy and the Labor Market: A Quasi-Experiment in Sweden (August 2023) -- with John Coglianese and Christina Patterson,  Revise and Resubmit, American Economic Review 

Abstract: We analyze a monetary quasi-experiment in Sweden from 2010--2011, when the Riksbank raised the interest rate substantially. We argue that this increase was unrelated to labor market conditions, driven instead by new concerns at the Riksbank about financial stability. Using a battery of specifications that rule out domestic or international confounders, we show that this monetary tightening led to a substantial economic contraction, raising unemployment by 1--2 percentage points. Using administrative micro data, we find that nominal wage rigidity drove much of the unemployment response and that the monetary contraction was more regressive than the typical business cycle.

• Labor Cost Adjustments During  the Great Recession : Wages, Separations, and Labor Market Frictions  (March 2024) 

Abstract: Using Swedish microdata, I analyze wage adjustments and employment flows following an aggregate demand shock. For identification, I exploit variation in firm-level exposure to the Great Recession, by differences in their export-to-sales ratios. I find a co-movement between individual firms' profits and their workers' wages of 6-8%, but the dominant part of adjustment came through reductions in employment. Wage-setting institutions affected these flows. Workers covered by a predetermined union contract that provided individual workers with guaranteed wage increases had eight-times more employment than wage adjustments, whereas workers covered by a less stringent union contract had an adjustment ratio closer to one-for-one. 

• Business Cycles and Production Networks   [2018, E-mail for latest version]   Working Paper Department of Economics, Uppsala University   

Abstract (extended): What is the origin of business cycles? The traditional view is that a business cycle is due to shocks correlated across sectors. This is complemented by a recently emerging literature where idiosyncratic shocks to larger or well interconnected sectors contribute to aggregate variation. This paper addresses the relative empirical importance of these two channels of business cycle variation. Based on a network-model à la Acemoglu et al. (2012), I derive an influence vector for empirical aggregation and evaluation. Further, by decomposing this vector I identify the elements that drive the amplification. Results demonstrate that up to one-third of the business cycle is driven by idiosyncratic productivity variation together with network amplifications. In addition, there may exist important sector-level frictions, which motivate a complicated weighting matrix based on network-linkages, but they do not further skew the interconnections between sectors. This suggests that the size distribution is a sufficient statistic for detecting the macroeconomic implications of micro-level shocks.