Research

Working Papers

Low Passthrough from Inflation Expectations to Income Growth Expectations: Why People Dislike Inflation (with Ina Hajdini, Edward S. Knotek II, John Leer, Robert Rich and Raphael Schoenle) Federal Reserve Bank of Cleveland, Working Paper No. 22-21

The Geographic Effects of Monetary Policy (with Juan Herreño) Federal Reserve Bank of Cleveland, Working Papers No. 22-15

Export-Led Decay: The Trade Channel in the Gold Standard Era (with Bernardo Candia) Federal Reserve Bank of Cleveland, Working Papers No. 21-11

Publications

Work in Progress

Transmission of International Monetary Policy Shocks on Firms Expectations and Decisions (with Serafin Frache, Rodrigo Lluberas and Javier Turen)

This paper shows how international shocks can affect the local economy by affecting expectations. Motivated by the presence of a Global Financial Cycle, we study the transmission of monetary policy (MP) shocks in the US on firms expectations about the local economy. We combine data from a long panel survey of firms expectations in Uruguay with granular information about firms' debt position, the share of debt denominated in US dollars and total imports on a monthly basis. We then explore the responses of both expectations and firm decisions after a MP shock in the US. We show that such shock effectively affect firms inflation and cost expectations. This response is heterogeneous on the position and whether that the debt is denominated in US dollars, which group have a higher inflation expectation reaction. We find similar results for importers. We find that this group, which expects higher inflation, increases their current imports, arguably in anticipation to a future rise in the exchange rate as a consequence of the MP shock.

The Price Pass-Through of Local Shocks and the Effectiveness of Fiscal Devaluations (with Juan Herreño)

The effectiveness of local fiscal policies in a monetary union depends on the reaction of prices. We estimate the pass-through of local sale taxes to prices to using data underlying the CPI. We estimate a higher pass-through of sale taxes on tradable goods relative to non-tradable goods. We use a New Keynesian model where regions trade and consume tradable and non-tradable goods to interpret the evidence. In the model, the pass-through of a sale tax depends on the extent of geographical competition for a good. We explore conditions under which fiscal policies are output and welfare-improving.

Other Publications

Understanding Which Prices Affect Inflation Expectations (with Chris Campos and Michael McMain) Economic Commentary (Federal Reserve Bank of Cleveland), no. 2022–06 (April)

In Press: NY Times

Indirect Consumer Inflation Expectations (with Ina Hajdini, Edward Knotek II, Robert Rich, John Leer and Raphael Schoenle) Economic Commentary (Federal Reserve Bank of Cleveland), no. 2022–03 (March)

In Press: WSJ, The Economist