Working Papers

Optimal Monetary Policy with Informational Frictions
with George-Marios Angeletos, revise and resubmit, JPE

This paper studies optimal monetary policy in an environment in which firms' pricing and production decisions are subject to informational frictions. [slides]

Cycles, Gaps, and the Social Value of Information
with George-Marios Angeletos and Luigi Iovino, revise and resubmit, AER

What are the welfare effects of the information contained in macroeconomic statistics, central-bank communications, or news in the media? We address this question in an elementary DSGE model that allows for incomplete information.

Collateral Constraints and Noisy Fluctuations

Collateral constraints introduce a feedback between the financial market and the real economy. I show how this feedback can generate expectations-driven fluctuations in asset prices and macroeconomic outcomes when information is dispersed.

Predatory Trading and Credit Freeze

Predatory trading may make it exceedingly difficult for banks and financial institutions to raise credit in times of temporary financial distress.

Financial Frictions in Production Networks
with Saki Bigio

We show that the input-output structure of an economy has important implications for the impact of financial frictions on aggregate activity. The more firms engage in inter-firm trade, the greater the effect of financial frictions.

In Progress

A Traffic Jam Theory of Recessions

I construct a dynamic economy in which agents are interconnected in a circular network: the output produced by one agent is the consumption good of another. I show how this economy can generate recessions which resemble traffic jams without the aid of aggregate shocks.

Ripple Effects in the Macroeconomy

Old Working Papers

Dispersed Information over the Business Cycle: Optimal Fiscal and Monetary Policy
with George-Marios Angeletos, November 2008
(this paper is subsumed by "Optimal Monetary Policy with Informational Frictions")