Working Papers

Identifying the Impact of Inflation Expectations -- October 2023 -- provides a credible estimate of the pass-through from inflation expectations to inflation. Key insight: different demographic groups respond differently to sectoral price changes, a fact that is exploited to identify the inflationary impact of expectations. A one-percentage-point rise in the expected rate of inflation increases (regional) inflation by 60 basis points. Interestingly, long-run expectations -- say, over 5 to 10 years -- don't seem to matter much. #replication files.

Misspecification and the Restricted Perceptions Approach -- December 2022 -- the restricted perceptions approach is an expectational modeling paradigm that generalizes rational expectations. Model agents are put on par with economists: they identify and estimate, using available data, a parametric family of (linear) forecast models that are almost always misspecified. Nevertheless, agents do not make systematic forecasting errors.

Liquidity, Unemployment, and the Stock Market -- with Mario Silva -- August 2021 -- a Mortensen-Pissarides model with a single twist: a limited commitment problem in the goods market. An aggregate demand channel arises that can lead to multiple equilibria and explains the positive co-movement in stock prices, unemployment and real interest rates.

Endogenously (Non-)Ricardian Beliefs -- with Emanuel Gasteiger -- December 2023, substantially revised --multiple equilibria featuring both Ricardian and non-Ricardian outcomes impact inflation dynamics. Bayesian model estimates: 1970’s and 2021-22 periods of non-Ricardian beliefs and inflation. Disinflation a self-fulfilling and temporary escape from a non-Ricardian belief equilibrium.

Statistical Sunspots -- with Bruce McGough and Mei Zhu -- May 2019 --belief-driven dynamics exist in determinate models.

Heterogeneous Expectations and Micro-foundations in Macroeconomics -- with Bruce McGough -- November 2016 --forthcoming Handbook of Computational Economics, vol. 4.

Heterogeneous Beliefs and Trading Inefficiencies -- with Bruce McGough -- December 2015--forthcoming Journal of Economic Theory

Financial Frictions, the Housing Market, and Unemployment -- with Nicolas    Petrosky-Nadeau and Guillaume Rocheteau -- May 2015 -- forthcoming Journal of Economic Theory

Unstable Inflation Targets -- with George W. Evans -- October 2014

Imperfect Knowledge, Liquidity and Bubbles -- July 2015 -- forthcoming Journal of Economic Dynamics and Control

Adaptive Learning, Endogenous Inattention, and Changes in Monetary Policy -- with John Carlson, George Evans, and Bruce McGough -- 2006, unpublished manuscript.