This project will investigate how individual specific inflation rates affect the transmission of monetary policy. This research seeks to extend previous work to understand if inflation inequality matters for aggregate monetary policy response by using a quantitative model similar to Kaplan, Moll, and Violante to investigate how the joint-distribution between inflation rates and wealth (liquid and illiquid) matter for aggregate monetary policy response. Also, while inflation inequality between income groups and individuals differs over time, this work also seeks to uncover whether dispersion has increased, following income inequality trends. Nielsen Homescan consumer panel data will be used to measure household’s nondurable consumption.

How can estimates of microlevel causal effects be mapped into general equilibrium counterfactuals? Using a derivation of the central general equilibrium invariance result, this work studies general equilibrium counterfactuals for income tax rebate stimulus. The project develops a theoretically valid approximation of general equilibrium effects of spending and investment shocks in business-cycle models. It then uses estimates of responses to certain types of shocks to develop estimates of the impact of certain types of policies, which include general equilibrium effects. This research will add to our understanding of the effect of stimulus tools on the macroeconomy.

The extent to which capital and labor are substitutes and how this substitutability shapes worker outcomes is a key determinant of economic inequality. This project proposes to study the effect of bonus depreciation on worker outcomes using employer-employee matched Census data in order to understand whether capital investments in the form of new technologies are replacing workers and whether the impact is different for workers of various skill levels.

Much of the theory of market design operates in two extreme environments: One where monetary transfers are prohibited, and one where there are transfers but each individual values one dollar in the same way. This research seeks to understand how to optimally design goods markets in the presence of wealth inequality and is conducted across three discrete research papers. The first project develops an analytic framework for a middle ground where agents are wealth constrained or have income effects. The second project develops a continuous-time model of dynamic capital taxation, and the third project considers dynamic effects of inequality using formal models.

Whether and how to involve workers in decision-making at the workplace is a fundamental question of the organization of firms and economies more broadly. This project proposes to use a novel research design to study a 1994 reform in Germany that sharply abolished employee board representation in newly incorporated firms with fewer than 500 workers in order to analyze the effects of shared governance on a variety of firm and worker-level outcomes, including wages, distribution of profits, and inequality of pay within a firm. The authors will use a regression discontinuity design that exploits the 1994 reform, supplemented with a difference-in-difference approach that compares changes among shareholder firms to changes among nonshareholder firms that were never subject to co-determination and thus were not affected by the reform. This will allow them to control for general economic trends that may have impacted firm and worker outcomes around the timing of the reform.

How does the differential exposure of workers to recessions contribute to the overall size of the recession? Does this heterogeneity in exposure to aggregate shocks occur within or between firms, and what does this mean for the effectiveness of various stabilization policies (Unemployment Insurance or Monetary Policy)?