Alan Blinder‘s latest book, A Monetary and Fiscal History of the United States, 1961-2021 will be published in October by Princeton University Press. His paper, “Central Bank Communication with the General Public: Promise or False Hope?” (with Michael Ehrmann, Jakob de Haan, and David-Jan Jansen), is forthcoming in the Journal of Economic Literature. His newest paper, “Landings, Soft and Hard: The Federal Reserve, 1965-2022,” is forthcoming in the Journal of Economic Perspectives. Two short 2021 papers still await publication: “BPEA and Monetary Policy over 50 Years,” Brookings Papers on Economic Activity; and “Interactions between Monetary and Fiscal Policy: Yesterday, Today, and Tomorrow,” Federal Reserve Bank of Kansas City, Macroeconomic Policy in an Uneven Economy. Blinder delivered keynote addresses virtually at the National Bank of Ukraine-National Bank of Poland Research Conference (Kyiv, June 2021) and at a Bank of Finland-CEPR conference (Helsinki, September 2021)
Sylvain Chassang is an applied microeconomist whose work focuses on the design of economic institutions. His recent work includes both speculative theoretical exploration and empirical investigation, including field evaluations. In recent work he has proposed a new statistical framework to test for collusion in procurement when industries adapt to the regulatory environment. He has proposed and implemented new designs for the collection of taxes raised by governments with limited collection capacity. He has proposed new ways to value the opportunity cost of people’s time when evaluating policies that affect time use. Most recently, he has been evaluating various methods to elicit sensitive information in high stakes environments, key applications including the reporting of sexual harassment.
Ellora Derenoncourt works on inequality and labor markets. One of her research agendas focuses on the long-run determinants of racial inequality in the US. Derenoncourt’s article “Can you move to opportunity? Evidence from the Great Migration” (American Economic Review, 2022) showed that the Great Migration of Black Americans from the South to northern and western cities US marked a pivotal moment in the geography of opportunity for Black families. As backlash to the Migration intensified, areas once distinguished for high rates of upward mobility for Black children subsequently transformed into mobility deserts. Derenoncourt and Montialoux’s “Minimum wages and racial inequality” (Quarterly Journal of Economics, 2021) uncovered the first-order role historical federal minimum wage policy played in the trajectory of the Black-white earnings gap. Most recently, her working paper “Wealth of two nations: the US racial wealth gap, 1860-2020,” with Chi Hyun Kim, Moritz Kuhn, and Moritz Schularick, traces the US’s large and persistent racial wealth gap to its origins under slavery and Jim Crow. Future work in this area explores questions raised by this previous body of work, including the role of other labor market and social insurance policies in Black-white income and wage inequality; the link between the Great Migration and mass incarceration; and finally, the study of concrete historical policies in shaping variation in the Black-white wealth gap across the US. A second research agenda explores determinants of wages in low-wage labor markets. If workers in these markets are sufficiently mobile across jobs, wage policies of large labor market actors, from national private retailers to the federal government, ought to ripple throughout the broader economy and affect competitor employers. With collaborators David Weil and Clemens Noelke, Derenoncourt explores this in the context of large retailers’ voluntary minimum wages and the federal contractor minimum wage. In related work with Lorenzo Lagos, François Gerard, and Claire Montialoux, she is exploring the link between wage setting institutions, informality, and inequality in Brazil.
William Dudley‘s recent research has focused on digital finance, sovereign debt, and U.S. monetary policy. With respect to digital finance, he has led the Digital Finance Project Team of the Bretton Woods Committee (with Carolyn Wilkins) and initiated a stream of policy briefs that examine the dangers and opportunities in crypto markets and the potential positive use cases of the blockchain technology and decentralized finance (DeFi). He is a member of the BWC sovereign debt working group, which has published two papers on sovereign debt issues recently. With respect to monetary policy, he has critiqued the current operating regime of the Federal Reserve and argued that how the Fed’s 2 percent average inflation targeting regime has been implemented ensured that the Fed would be slow to tighten monetary policy and that inflation would rise as a consequence. Looking forward over the next two years, his research will continue to be focused on digital finance, sovereign debt, and U.S. monetary policy. He also will continue to do work concerning what changes to the U.S. Treasury market could be implemented to make it more resilient during times of stress.
Ilyana Kuziemko‘s research focuses on US economic inequality and in particular its interaction with political and labor-market institutions. “Local Economic and Political Effects of Trade Deals: Evidence from NAFTA” (2021, with Jiwon Choi, Ebonya Washington, and Gavin Wright) argues that the 1994 North American Free Trade Agreement lead to large employment losses in counties with industries dependent on pre-NAFTA tariffs and led voters in these counties to punish the Democrats in future elections. “Mobility for All: Representative Intergenerational Mobility Estimates over the 20th Century” (2021, with Elisa Jacome and Suresh Naidu) documents large increases in intergenerational relative mobility for the cohorts who entered the labor market in the low-inequality post-World War II decades, while mobility declined thereafter. “Compensate the Losers? Economy-policy preferences and partisan realignment in the US” (2022, with Nicolas Longuet Marx and Suresh Naidu) argues that, at least in the US, the Democratic Party’s evolution on economic issues has played an important role.
Adrien Matray‘s research explores the causes and consequences of misallocation of capital in developed and developing countries. Using French and US administrative and census data, he is studying how the specific design of various fiscal policies can affect capital misallocation as such policies interact with financing frictions. For instance, fiscal policies can lower misallocation when they directly relax the credit constraint of high productivity firms by front-loading subsidies that allow firms to pay fixed costs of investing. But they can also amplify misallocation by subsidizing low productivity firms (for instance via labor subsidies targeted at low productivity workers). Adrien started this research agenda in Boissel and Matray (2022) “Dividend Taxes and Capital Allocation” (American Economic Review, forthcoming). The ongoing agenda is using administrative and census data in France, Turkey and the US, to systematically study how different fiscal policy designs interact with financing frictions to affect misallocation. The goal is to precisely quantify how specific features of each policy affect misallocation to systematically approach optimal fiscal policy design. On developing countries (India) Matray is studying the consequences of the liberalization of FDI in manufacturing and services for structural change and the income distribution, for which he received an NSF grant. Specifically, he asks whether liberalization leads to a movement of employment from the agricultural sector to the manufacturing and service sectors, greater educational investment, and/or the entry of women into the labor force. Matray is also working on Brazil with Julia Fonseca, where they study the effect of financial inclusion on low-income consumption, savings, and occupational choices. Specifically, they study how access to finance affect the decisions of workers to allocate in high-risk/ high-returns sectors or not, which ultimately could be one of the main drivers of economic development.
Stephen Redding‘s research interests include international trade, economic geography, urban economics, and productivity growth. Recent work has been concerned with heterogeneous firms and international trade, the distributional consequences of globalization, agglomeration forces, and transport infrastructure improvements. The paper “Trade, Structural Transformation and Development: Evidence from Argentina 1869-1914” (joint with Pablo Fajgelbaum and published in the Journal of Political Economy 2022) provides new theory and evidence on the role of reductions in transatlantic freight rates and the construction of the railroad network in propelling Argentina’s rapid economic development in the late-19th century. The paper “The Making of the Modern Metropolis: Evidence from London” (joint with Stephan Heblich and Daniel Sturm and published in the Quarterly Journal of Economics 2020) uses the revolution in transport technology from the invention of steam railways, newly-constructed spatially disaggregated data for London from 1801-1921, and a quantitative urban model to provide evidence on the role of the separation of workplace and residence in supporting dense concentrations of economic activity in metropolitan areas. Steam railways dramatically reduced travel times and permitted the first large-scale separation of workplace and residence.
Christopher Sims‘ research is on macroeconomic theory and policy, and monetary-fiscal coordination. His recent paper, “Optimal Fiscal and Monetary Policy with Distorting Taxes,” discusses government debt finance when interest rates are low. It shows that there can be a substantial fiscal cost from expanding debt, even when the rate of growth of the economy exceeds the interest rate. The cost comes through the likelihood that debt expansion will raise rates. Even if this leaves the interest rate below the growth rate, the increased interest expense can be burdensome. A second strand of his research examines the relation among aggregate private debt, spreads of risky over less risky interest rates, and economic activity. He explored this, with three co-authors, in the paper “Feedbacks: Financial Markets and Economic Activity,” which appeared in the June 2021 issue of the American Economic Review. Disturbances originating in the financial sector are an important source of business cycle variation, but they seem to be characterized initially by rises in spreads. Credit aggregates react passively to these disturbances, rather than generating them. A current project explores whether historical US data on inflation and fiscal variables in the US can shed light on the possible consequences of current very large fiscal deficits for future inflation.
Carolyn Wilkins is conducting research with Yasuo Terajima and Shirley Ren on the implications of monetary policy and the distribution of income. Wilkins is also working with James Chapman to understand issues related to the structure of crypto markets, using relatively new micro data sets. In a collaboration with William Dudley, she is co-chairing the Bretton Woods Digital Currency Project Team, Wilkins is co-chairing the Bretton Woods Digital Currency Project Team, which is tasked with identifying key outstanding issues and risks across the decentralized finance regime.
Leeat Yariv’s research focuses on political economy, market design, social and economic networks, and experimental economics. One of her recent papers, “Who Cares More? Allocation with Diverse Preference Intensities” (with Pietro Ortoleva and Evgenii Safonov) characterizes optimal allocation rules when individual preferences are known and when they are not. Goods and services—public housing, medical appointments, schools—are often allocated to individuals who rank them similarly but differ in their preference intensities. When preference intensities are private information, second-best allocations always involve such lotteries and, crucially, may coincide with first-best allocations.
Owen Zidar‘s work focuses on tax policy and inequality. One strand of his recent research uses full-population US Treasury tax return data to study the role of firms in generating inequality. Nearly half of the rise of reported income of the top 1 percent since 1980 and the decline in the aggregate labor share results from business profit growth of closely-held private firms. The prominence of these private firm-owners at the top of the income distribution motivated further exploration of the nature of top incomes and top wealth. Zidar will continue working on topics related to tax policy and inequality. With Raj Chetty, John van Reenen, and Eric Zwick, he is investigating the links between entrepreneurship and opportunity using US tax data. With Zwick and Amy Finkelstein, he is quantifying the effect of rising health costs on inequality. Danny Yagan, Eric Zwick, and Zidar have been awarded a contract with the IRS to evaluate the tax cuts and jobs act as well as prior tax reforms. Our goal is to research the efficiency and equity impacts of different proposals to try to inform policymakers about the design of the US tax system. Zidar and Zwick are considering writing a book on top inequality and what to do about it.