Sergi Barcons - Research

Job Market Paper

Rent Inflation and Monetary Policy, with Gonzalo Paz-Pardo

Rental prices enter the inflation indices that central banks target, yet rents behave unlike other consumer prices after a monetary policy shock. We build a Heterogeneous-Agent New Keynesian model where households rent, own, or become landlords, with endogenous house prices and rents, and sticky leases. A monetary tightening keeps would-be buyers renting, and rents rise until enough owners supply the extra rental housing. About three-quarters of the effect on the rental market is supply-driven: higher financial returns and mortgage costs make supplying rental housing less attractive. We study how policy should treat rent inflation. A Taylor rule based on a price index that incorporates rents generates more consumption and inflation volatility than one which ignores rents. The welfare-optimal weight on rent inflation is negative under both general demand and rental supply shocks: central banks should react to rental increases with accommodative policy.

Working Papers

Intergenerational Welfare Assessments, with Eduardo Dávila and Andreas Schaab

NBER Working Paper 34616

This paper studies welfare assessments in economies with rich demographics. We introduce the notion of demographically disconnected economies, those with no date at which all individuals are concurrently alive. We identify the unique class of units that always enables meaningful welfare comparisons in such economies: those based on perpetual consumption, that is, consumption at all dates. Using these units, we uncover a novel possibility: feasible perturbations of Pareto efficient allocations can yield Kaldor-Hicks efficiency gains. We also introduce a decomposition that attributes intertemporal-sharing efficiency gains to financial frictions or demographic differences. These results allow us to derive new insights in three workhorse intergenerational models: (i) Samuelson (1958) two-date-life model, offering a novel rationale for social security; (ii) Diamond (1965) growth model, providing a new theory for capital taxation and capital over- or underaccumulation; and (iii) Samuelson (1958) three-date-life model, decomposing the efficiency gains from intergenerational transfers into frictional and demographic sources.

Work in Progress

Ramsey Optimal Policy in Production Networks with Menu Costs, with Mishel Ghassibe, Anton Nakov and Dominik Thaler

We study optimal monetary policy in a production network subject to large sectoral shocks, such as a sharp increase in energy prices. With menu costs, firms choose when to adjust prices, so large shocks change the sectoral characteristics that guide inflation stabilization in linearized models. We solve the fully nonlinear Ramsey problem to determine which sectors the central bank should stabilize and when accommodating full price adjustment in one sector is preferable to stabilizing an inflation index.

Optimal Public Debt Adjustment with Heterogeneous Agents: the Role of Aggregate Risk

What is the role of aggregate risk in determining how fast a government should repay the excess public debt contracted during a recession? I study optimal fiscal adjustment in a heterogeneous-agent model with capital and aggregate shocks. High public debt crowds out capital and depresses wages, with severe consequences for hand-to-mouth households. It also raises interest rates, creating a trade-off between capital gains and a redistributive motive. Both effects are stronger in recessions, which is where aggregate risk matters. Numerically, the welfare-maximizing path of debt adjustment is consistent with the one observed in the US, and it departs from tax smoothing because of household heterogeneity and uncertainty about the future.