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Journal Article
Treasury Debt and Inflation Tax
We calculate the implicit inflation tax borne by households due to their holdings of U.S. Treasury debt. Nominal assets lose value due to unexpected inflation. We calculate unexpected changes in current and future inflation and document households’ holdings of Treasury debt across the wealth distribution, accounting for direct and indirect holdings through financial intermediaries. Combining these two pieces of information, we calculate the implied inflation tax across household wealth groups over the past four decades.
Which U.S. Households Have Credit Card Debt?
Households carrying credit card balances tend to be middle income, but the ratio of credit card debt to income is highest among those who earn the least.
How Much Are We “Taxed” by Surprise Inflation?
When inflation surprises to the upside, borrowers pay back less in real terms. And Uncle Sam is America’s biggest borrower.
Working Paper
Attention and a Paradox of Uncertainty
I show that macroeconomic uncertainty during recessions can arise from people paying more attention to aggregate events. When information is dispersed, people's attempts to acquire more information can lead to higher aggregate volatility, forecast dispersion, and uncertainty about aggregate output. Information rigidity is reduced, consistent with evidence in forecast surveys, and distinct from the prediction of exogenous volatility shocks. When the model is calibrated to U.S. data, endogenous attention accounts for half of the observed fluctuations in volatility, forecast dispersion, and ...
Monetary Policy Surprises and Inflation Expectations
The private sector may slightly underestimate the short-term impact of monetary policy surprises on inflation but may predict longer-term effects fairly well.
Journal Article
Inflation Uncertainty among Eighth District Households
Survey data suggest that uncertainty about future inflation among Eighth District households rose during periods of significant change in monetary policy.
Working Paper
Optimal Asset Market Operations
We provide a unifying theory of how governments should trade assets in response to economic disturbances. Across a broad class of models with financial frictions, the first-order Ramsey plan is characterized by a target relationship among asset returns. The relationship is determined by empirically measurable asset demand and supply elasticities and can be implemented without having to identify the underlying frictions or disturbances. Due to financial frictions, optimal policy may preserve or widen spreads between returns to steer intermediation; absent this concern, the target stabilizes ...
Working Paper
Attention and Fluctuations in Macroeconomic Uncertainty
I show that economic agents’ attention to macroeconomic events can increase macroeconomic uncertainty during recessions. Agents face uncertainty about the aggregate state of the economy, receive dispersed information about it, and can pay attention to acquire more information. When the economy is in a bad state, agents choose to pay more attention, and their collective response increases three common measures of uncertainty: (i) aggregate output volatility, (ii) forecast dispersion about output, and (iii) subjective uncertainty about output. Uncertainty driven by agents’ attention implies ...
How Does Federal Income Tax Progressivity Vary by Income Source?
While the federal income tax system is progressive, the degree of progressivity depends on whether income comes from wages or from other sources.
Journal Article
The Distributional Effects of Bailouts
This article examines the distributional effects of government bailouts using a heterogeneous agent New Keynesian model with financial intermediation frictions. We analyze government equity injections to financial institutions financed by debt issuance, capturing essential features of bailout policies during financial crises. When calibrated to match key features of the U.S. economy, bailout policies are expansionary and reduce inequality through general equilibrium effects operating primarily via aggregate demand stimulation and increased labor income rather than direct wealth effects. ...