Working Papers
"The Welfare Implications of Heterogeneous Wage Rigidities in a New Keynesian Model." (Job Market Paper)
Abstract: How relevant is wage rigidity to individual welfare, particularly in the aftermath of an inflationary period such as 2022? This paper examines the role of wage rigidity in shaping household welfare under heterogeneous wage settings in the United States, focusing on responses to a cost-push shock, a key driver of post-pandemic inflation. Using panel survey data, I document significant heterogeneity in wage rigidity: hourly wages for low-income households are updated less frequently than those for high-income households. To interpret these patterns and assess their implications, I develop a simple two-agent New Keynesian model in which households differ exogenously in both wage-setting frequency and access to financial markets. One group has flexible wages and can smooth consumption via saving, while the other faces staggered wage contracts and lives hand-to-mouth. The results show that wage rigidity amplifies labor market responses to a cost-push shock, with households on staggered wage contracts experiencing disproportionately larger consumption losses. Welfare analysis further reveals that greater wage rigidity exacerbates these losses, highlighting the importance of accounting for heterogeneous wage setting when assessing welfare outcomes and designing policy responses.
"Consumer Sentiments, Noise Shocks and Volatility."
Abstract: This paper provides evidence that noisy news, as reflected in consumer sentiment, is a significant driver of U.S. business cycles. Using a two-step structural VAR identification strategy, I find that noise and long-run news shocks together explain approximately 30--40 percent of GDP fluctuations over horizons of two to four years. Noise shocks account for a substantial portion of consumer sentiment volatility and have transitory effects on all macroeconomic variables. These findings suggest that noisy expectations about future fundamentals are an important and often overlooked source of business cycle dynamics.
Publication
"Some Long-Run Correlations of Inflation in Developed Countries" with Kenneth D. West, 2022, Economia, Vol. 45(89), 1-23.
Abstract: Using 100+ years of data from 18 developed countries, we use a frequency domain technique to compute “long-run” correlations between inflation on the one hand and money growth and nominal interest rates on the other. The estimated long-run correlations are almost always positive. Their magnitude is relatively substantial for money growth, more modest for interest rates. We conclude that some traditional propositions about monetary neutrality are broadly consistent with the data.