From Hyperinflation to Stable Prices: Argentina's Evidence on Menu cost Models (with Fernando Alvarez, Martin Gonzalez-Rozada, and Andy Neumeyer), September 2018 (New version!). Forthcoming, Quarterly Journal of Economics
For a class of menu cost models, we derive several predictions about how price setting behavior changes with inflation both at very high and at near-zero inflation rates. We contrast these with Argentina's unique inflationary experience using micro-data on prices underlying the CPI. Then, we compute the welfare costs of a hyperinflation.
Regional Heterogeneity and the Refinancing Channel of Monetary Policy (with Andreas Fuster, Erik Hurst and Joe Vavra), August 2018 (New version!). Forthcoming, Quarterly Journal of Economics
We document that QE1 had the smallest effects on refinancing and spending in US regions with the largest house price declines. We use this evidence to discipline a heterogenous-agent model with mortgage refinancing frictions. We conclude that the strength of the refinancing channel of monetary policy varies over time with the regional distribution of housing equity.
The Aggregate Implications of Regional Business Cycles (with Erik Hurst and Juan Ospina), July 2018 (New version!). Revise and Resubmit, Econometrica
Regional business cycles have interesting implications for our understanding of aggregate business cycles, but drawing such inferences cannot be done by naively extrapolating from regional variation alone without the aid of a formal model. We begin by documenting a strong relationship across US states between local employment and wage growth during the Great Recession. This relationship is much weaker in US aggregates. Then, we present a methodology that combines such regional and aggregate data to estimate a medium-scale New Keynesian DSGE model and do quantitative analysis.
Skill-biased Technological Transitions (with Rodrigo Adao and Nitya Pandalai-Nayar), July 2018. (Draft coming soon)
We show that the skill investment decisions of young workers crucially determine how the economy adjusts to skill-biased technological changes. First, we develop a Dynamic Roy model where workers accumulate technology-specific skills. Then, exploiting variation in internet adoption across German regions, we show that the employment and wages of younger cohorts increased relative to older cohorts in occupations intensive in cognitive tasks in early adopting regions. We use this reduced-form responses to estimate the model and perform counterfactuals.
Counterfactual Equivalence in Macroeconomics (updated version of my Job Market Paper), February 2018
When studying counterfactual policy rules using structural models, researchers are often uncertain about features of the economy that are difficult to distinguish with available data. If the counterfactual is not robust to variation in such features, its credibility is undermined. I propose a novel method to tackle these and other related problems in macroeconomics.
Old Working Papers