• Fiscal stimulus with supply constraints

  Fornaro, Luca (2024-08)

  This paper provides a framework to study the macroeconomic implications of supply constraints. Supply constraints hamper firms’ ability to scale up production in response to surges in demand, disconnect prices from wages, ...
• An international perspective on inflation during the Covid-19 recovery

  Fornaro, Luca; Romei, Federica (2024-06)
• Endogenous production networks and non-linear monetary transmission

  Ghassibe, Mishel (2023-12)

  I develop a tractable dynamic sticky-price model, where input-output linkages are formed endogenously. The model delivers cyclical properties of networks that are consistent with those I estimate using sectoral and firm-level ...
• Sectoral dynamics of safe assets in advanced economies

  Castells Jauregui, Madalen; Kuvshinov, Dmitry; Richter, Björn; Vanasco, Victoria (2024-04-10)

  What is the sectoral composition of the market for safety, and does it matter for economic stability? To address these questions, we construct a novel dataset of sectoral safe asset positions in 24 advanced economies since ...
• Fragmented monetary unions

  Fornaro, Luca; Grosse-Steffen, Christoph (2024-06)

  We provide a theory of financial fragmentation in monetary unions. Our key insight is that currency unions may experience endogenous breakings of symmetry: that is episodes in which identical countries react differently ...
• Heterogeneity and aggregate fluctuations: insights from TANK models

  Debortoli, Davide; Galí, Jordi, 1961- (2024-03)

  We analyze the merits and limitations of simple tractable New Keynesian models (RANK and TANK) in accounting for the aggregate predictions of Heterogenous Agent New Keynesian models (HANK). By means of comparison of a ...
• Social capital, government expenditures and growth

  Ponzetto, Giacomo A. M.; Troiano, Ugo (2024-06-26)

  This paper shows that social capital increases economic growth by raising government investment in human capital through better political incentives and selection. We provide empirical evidence that a greater share of ...
• Monetary policy in an unbalanced global economy

  Fornaro, Luca; Romei, Federica (2023-06)

  We study optimal monetary policy during times of exceptionally high global demand for tradable goods, relative to non-tradable ones. The optimal monetary response entails a rise in inflation, which helps rebalance production ...
• The death and life of great British cities

  Heblich, Stephan; Nagy, David Krisztián; Trew, Alex; Zylberberg, Yanos (2023-07-03)

  This paper studies how cities’ industrial structure shapes their life and death. Our analysis exploits the large heterogeneity in the early composition of English and Welsh cities. We extract built-up clusters from early ...
• Idiosyncratic income risk and aggregate fluctuations

  Debortoli, Davide; Galí, Jordi, 1961- (2023-07)

  We study the role of idiosyncratic income risk for aggregate fluctuations within a simple heterogeneous households framework. We show that the presence of idiosyncratic income shocks affects the economy’s response to an ...
• Political preferences and the spatial distribution of infrastructure: evidence from California’s High-Speed Rail

  Fajgelbaum, Pablo; Gaubert, Cecile; Gorton, Nicole; Morales, Eduardo; Schaal, Edouard (2023-06-29)

  How do political preferences shape transportation policy? We study this question in the context of California’s High-Speed Rail (CHSR). Combining geographic data on votes in a referendum on the CHSR with a model of its ...
• Banks vs. firms: who benefits from credit guarantees?

  Martin, Alberto, 1974-; Mayordomo, Sergio; Vanasco, Victoria (2023-12-11)

  Governments often support private credit with guarantee schemes, compensating lenders for borrower defaults. Such schemes often rely on banks to allocate guarantees among borrowers, but how banks do so is not well understood. ...
• Do incompetent politicians breed populist voters?: evidence from Italian municipalities

  Boffa, Federico; Mollisi, Vincenzo; Ponzetto, Giacomo A. M. (2023-03)

  Poor performance by the established political class can drive voters towards antiestablishment outsiders. Is the ineffectiveness of incumbent politicians an important driver of the recent rise of populist parties? We provide ...
• Exploring European regional trade

  Santamaría, Marta (Santamaría Monturiol); Ventura, Jaume; Yeşilbayraktar, Uğur (2023-02-06)

  We use the new dataset of trade flows across 269 European regions in 24 countries constructed in Santamaría et al. (2020) to systematically explore for the first time trade patterns within and across country borders. We ...
• The scars of supply shocks: implications for monetary policy

  Fornaro, Luca; Wolf, Martin (2023-03)

  We study the effects of supply disruptions - for instance due to energy price shocks or the emergence of a pandemic - in an economy with Keynesian unemployment and endogenous productivity growth. By temporarily disrupting ...
• State dependence of fiscal multipliers: the source of fluctuations matters

  Ghassibe, Mishel; Zanetti, Francesco (2022-07)

  We develop a general theory of state-dependent fiscal multipliers in a framework featuring two empirically relevant frictions: idle capacity and unsatisfied demand. Our key novel finding is that the source of fluctuations ...
• Pareto-improving optimal capital and labor taxes

  Greulich, Anna Katharina; Laczó, Sarolta; Marcet, Albert (2022-08)

  We study optimal Pareto-improving factor taxation when agents are heterogeneous in their labor productivity and wealth and markets are complete. Pareto-improving policies require a gradual reform: labor taxes should be ...
• Should the ECB adjust its strategy in the face of a lower r*?

  Andrade, Philippe; Galí, Jordi, 1961-; Le Bihan, Hervé; Matheron, Julien (2021-04-13)

  We address this question using an estimated New Keynesian DSGE model of the Euro Area with trend inflation, imperfect indexation, and a lower bound on the nominal interest rate. In this setup, a decrease in the steady-state ...
• Covid-19 coronavirus and macroeconomic policy

  Fornaro, Luca; Wolf, Martin (2020-03-21)

  As we write, the Covid-19 coronavirus is spreading throughout the globe. Besides its impact on public health, this coronavirus outbreak is likely to have significant economic consequences. The consensus is that the virus ...
• Reserve accumulation, growth and financial crises

  Benigno, Gianluca; Fornaro, Luca; Wolf, Martin (2022-03)

  We present a model that reproduces two salient facts characterizing the international monetary system: Fast growing emerging countries i) run current account surpluses, ii) accumulate international reserves and receive net ...

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