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How Should the Government Spend the Fiscal Budget during the COVID-19 Pandemic?
A mix of expanded unemployment insurance benefits and payroll subsidies to employers may be more effective in speeding up the recovery than implementing just one of those policies.
Working Paper
Labor Market Shocks and Monetary Policy
We study the positive and normative implications for inflation of employer-to-employer (EE) worker transitions by developing a heterogeneous agent New Keynesian model featuring a frictional labor market with on-the-job search. We find that EE dynamics played an important role in shaping the differential inflation dynamics observed during the Great Recession and COVID-19 recoveries. Despite both recoveries sharing similar unemployment dynamics, the recovery from the Great Recession exhibited subdued EE transitions and inflation dynamics. In our model, the optimal monetary policy involves a ...
Working Paper
Labor Market Shocks and Monetary Policy
We develop a heterogeneous agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the positive and normative implications of employer-to-employer (EE) transitions for macroeconomic outcomes and monetary policy. We find that EE dynamics played an important role in shaping inflation dynamics during the Great Recession and COVID-19 recoveries, with the former exhibiting subdued EE transitions and inflation despite both episodes sharing similar unemployment dynamics. Optimal monetary policy prescribes a strong positive response to EE ...
Working Paper
Labor Market Shocks and Monetary Policy
We develop a heterogeneous agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the positive and normative implications of employer-to-employer (EE) transitions for macroeconomic outcomes and monetary policy. We find that EE dynamics played an important role in shaping inflation dynamics during the Great Recession and COVID-19 recoveries, with the former exhibiting subdued EE transitions and inflation despite both episodes sharing similar unemployment dynamics. Optimal monetary policy prescribes a strong positive response to EE ...
Working Paper
Labor Market Shocks and Monetary Policy
We develop a heterogeneous agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the positive and normative implications of employer-to-employer (EE) transitions for macroeconomic outcomes and monetary policy. We find that EE dynamics played an important role in shaping inflation dynamics during the Great Recession and COVID-19 recoveries, with the former exhibiting subdued EE transitions and inflation despite both episodes sharing similar unemployment dynamics. Optimal monetary policy prescribes a strong positive response to EE ...
Working Paper
Labor Market Shocks and Monetary Policy
We develop a heterogeneous agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the positive and normative implications of employer-to-employer (EE) transitions for macroeconomic outcomes and monetary policy. We find that EE dynamics played an important role in shaping inflation dynamics during the Great Recession and COVID-19 recoveries, with the former exhibiting subdued EE transitions and inflation despite both episodes sharing similar unemployment dynamics. Optimal monetary policy prescribes a strong positive response to EE ...
Working Paper
Labor Market Shocks and Monetary Policy
We develop a heterogeneous agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the positive and normative implications of employer-to-employer (EE) transitions for macroeconomic outcomes and monetary policy. We find that EE dynamics played an important role in shaping inflation dynamics during the Great Recession and COVID-19 recoveries, with the former exhibiting subdued EE transitions and inflation despite both episodes sharing similar unemployment dynamics. Optimal monetary policy prescribes a strong positive response to EE ...
Working Paper
Labor Market Shocks and Monetary Policy
We develop a heterogeneous agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the positive and normative implications of employer-to-employer (EE) transitions for inflation. We find that EE dynamics played an important role in shaping the differential inflation dynamics observed during the Great Recession and the COVID-19 recoveries, with the former exhibiting subdued EE transitions and inflation despite both episodes sharing similar unemployment dynamics. The optimal monetary policy prescribes a strong positive response to EE ...
Working Paper
Labor Market Shocks and Monetary Policy
We develop a heterogeneous-agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the role of worker flows in inflation dynamics and monetary policy. Motivated by our empirical finding that the historical negative correlation between the unemployment rate and the employer-to-employer (EE) transition rate up to the Great Recession disappeared during the recovery, we use the model to quantify the effect of EE transitions on inflation in this period. We find that the four-quarter inflation rate would have been 0.6 percentage points higher ...