Research

Working Papers

Selection Effects in Retail Chain Pricing (Job Market Paper) Link to Paper

This paper examines the effect of retail chain price synchronization on the extent to which nominal shocks have real effects on the economy. I develop a menu cost model in which stores belong to retail chains. However, retail chains have imperfect information over store-level state variables when determining prices. This constraint affects how firms optimally choose the timing of their price changes also known as the selection effect. I find that selection effects are more than twice as large in the presence of retail chains compared to the standard menu cost model. This relationship suggests that the standard menu cost model overestimates the degree of monetary non-neutrality by ignoring synchronization in retail chain pricing.

Price Synchronization within a Retail Chain

Stay-at-Home Orders in a Fiscal Union (with Mario Crucini) Link to Paper NBER Working Paper No. 28182 Media: (VoxEU, Vanderbilt Unity & Democracy) Video: SEA Conference 2020

State and local governments throughout the United States attempted to mitigate the spread of Covid-19 using stay-at-home orders to limit social interactions and mobility. We study the economic impact of these orders and their optimal implementation in a fiscal union. Using an event study framework, we find that stay-at-home orders caused a 4 percentage point decrease in consumer spending and hours worked. These estimates suggest a $10 billion decrease in spending and $15 billion in lost earnings. We then develop an economic SIR model with multiple locations to study the optimal implementation of stay-at-home orders. From a national welfare perspective, the model suggests that it is optimal for locations with higher infection rates to set stricter mitigation policies. This occurs as a common, national policy is too restrictive for mildly infected areas and causes greater declines in consumption and hours worked than are optimal.

Optimal Policy Model Results

Temporary Sales in Response to Demand Shocks (with Ben Eden and Maya Eden) Link to Paper

Temporary sales, defined as large price drops that quickly rebound, are a puzzling phenomenon from a macroeconomic perspective. We argue that temporary sales play an important role in the response of prices to demand shocks. Using data from supermarkets, we find that the average price of a product decreases by almost 1.5% following a negative shock to demand. The standard practice of removing sales from the price distribution overestimates the degree of price rigidity by a factor of 2. We reconcile our empirical findings using a model in which sales occur in response to the accumulation of unwanted inventories.

Demand Uncertainty and Temporary Sales

Work-in-Progress

County-level Business Cycles and Optimal Fiscal Policy (with Mario Crucini and Nam Vu)

Business cycles across counties in the United States are highly asymmetric. These asymmetric cycles create the tradeoff for fiscal policy to help counties which experience severe recessions or to maximize productivity in areas which experience economic booms. Empirically, we estimate that counties which experience a 10% larger decline in private wages receive 3% more government wages during recessions. However, in non-recessionary periods, a 10% increase in private wages leads to a 2% increase in government wages. We then develop a model of counties in a currency union to analyze optimal fiscal policy and reconcile the empirical non-linearities.

County-level Industry Specialization

Economic Impact of Black Lives Matter Protests (with Craig Sylvera)

Protests occurred in hundreds of cities across the United States in response to the police killing of George Floyd on May 25th, 2020. Although many of the protests remained peaceful, some protests turned violent. This paper estimates the differential impact of violent protests on business activity at the city level. Cities with non-violent protests experienced a 1 percentage point decrease in businesses open for the duration of the protests. In contrast, violent protests caused a 3 percentage point decrease. These impacts revert after several weeks in both violent and non-violent protest cities.

Percent Change in Businesses Open

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