Working Papers
Istudy optimal macroprudential policy when its effects on investment and productivity are taken into account. To do so, I introduce a tractable way of modeling misallocation that generates a link between investment and productivity and can be easily taken to the data. Because macroprudential policies affect investment, they lead to productivity losses. I show that, when the policymaker is constrained in their available instruments, this generates a policy trade-off between financial stability and productivity growth. In a model that can generate crisis as in the data and matches misallocation moments, I find that it is optimal to encourage borrowing rather than restrict it.
The Macroeconomics of Wage Rigidity and Job Separations (April 2026), with Andres Blanco, Andres Drenik and Chris Moser
R&R at Review of Economic Studies
We study the macroeconomic implications of wage-rigidity-induced job separations in an equilibrium labor market model with four features: worker productivity shocks, staggered wage contracts, search frictions, and two-sided lack of commitment. Endogenous quits and layoffs are unilaterally initiated whenever a worker’s wage-to productivity ratio or markdown moves outside an inaction region. We derive sufficient statistics for the labor market response to inflationary shocks based on the distribution of markdowns, which we show how to identify using microdata on wage changes and worker flows between jobs. Using an extension of the model for quantitative analysis, we find that aggregate shocks generate significant cyclicality in endogenous job separations, including 62 percent of the empirical quit volatility and 94 percent of the empirical layoff volatility
We use high-frequency asset price changes around Consumer Price Index announcements in the US to learn about market perceptions regarding the economy. First, we document three facts. An unexpected increase in the CPI inflation leads to an increase in (a) treasury nominal yields (b) forward breakeven inflation rates. The response of the stock price and the future annual dividends of S&P 500 companies varies over the years. We interpret these facts through the lens of a New Keynesian Model with an inflation announcement to decompose unexpected inflation into demand and supply components. We find that the share of supply in unexpected inflation has increased by 20 percentage points post-covid.
Publications
Central Bank Credibility and Fiscal Responsibility (September 2024), with Jesse Schreger and Pierre Yared.
American Economic Review: Insights
We consider a New Keynesian model with strategic monetary and fiscal interactions. The fiscal authority maximizes social welfare. Monetary policy is delegated to a central bank with an anti-inflation bias that suffers from a lack of commitment. The impact of central bank hawkishness on debt issuance is non-monotonic because increased hawkishness reduces the benefit from fiscal stimulus while simultaneously increasing real debt capacity. Starting from high levels of hawkishness (dovishness), a marginal increase in the central bank’s anti-inflation bias decreases (increases) debt issuance.
American Economic Journal: Macroeconomics
We study the distribution of labor income during large devaluations. Across countries, inequality falls after large devaluations within the context of a surge in inflation and a fall and subsequent recovery of real labor income. To better understand inequality dynamics, we use a novel administrative dataset covering the 2002 Argentinean devaluation. We show that following a homogeneous fall in real labor income across workers, the bottom of the income distribution recovers faster than the top. Low labor mobility and lack of union coverage among high-income workers explain their slow recovery.