Extremely insightful review. We use one of the ML method developed by Athey, Tibshirani and Wager to study firms heterogeneity and aggregate fluctuations. Link to draft here: bit.ly/46EnjqT

"For whom the bill tolls: redistributive consequences of a monetary-fiscal stimulus" accepted for publication in European Economic Review :-) We show that middle-aged housoholds payed for the pandemic stimuls in spite of receiving largest transfers. Why: sites.google.com/view/michal…

New CEPR Discussion Paper - DP21934 Causal State-Dependent Local Projections Joel David @ChicagoFed, Raffaella Giacomini @EconUCL @ucl, Xiyu Jiao @uniofgothenburg, Weining Wang @BristolUni ow.ly/Lfyq50ZNmie #CEPR_MEF #EconTwitter

Highly relevant! "Endogenous monetary policy effectiveness" by Valerio Scalone and Silvana Tenreyro. "How does the effectiveness of monetary policy vary over the policy cycle? Do tightenings and loosenings have symmetric effects on the macroeconomy? This paper addresses these questions using a nonlinear empirical framework that allows financial exposure to evolve endogenously in response to macroeconomic conditions and monetary policy changes. We provide new evidence on how monetary policy effectiveness varies over the policy cycle and across economic states. We find that i) monetary policy transmits more strongly to the real economy in periods of elevated private-sector financial exposure; ii) tightening cycles increase financial exposure in the short run, which in turn amplifies the effect of further interest rate increases, whereas loosening cycles lower financial exposure, increasingly dampening the effect of interest rate cuts; iii) tightening during economic downturns further intensifies debt-servicingpressures, making monetary policy even more potent; instead, when the tightening occurs during expansions, monetary policy effectiveness is not materially affected." ecb.europa.eu/pub/pdf/scpwps…

For Europe, a difficult winter ahead with another energy price crisis, higher borrowing costs, unmet Ukraine funding needs, and concerns about the fiscal outlook in large EU economies ahead of a busy election calendar in 2027. A trade war with China would be the cherry on top.

🚨 Conference deadline alert! 🚨 Macroeconomic Policies with Heterogeneous Agents. In Paris, December 15-16. Keynote by @ben_moll. Policy panel with @ojblanchard1, @XJaravel, @doro_rouzet. Submission deadline is on Sunday. Send us your best work! cepr.org/events/macroeconomi…

Lustig helps put things in perspective in 'Whatever it takes was not free'. 👇thetwocents.substack.com/p/w…

Had a fantastic time teaching a mini-course on 𝗠𝗮𝗰𝗵𝗶𝗻𝗲 𝗟𝗲𝗮𝗿𝗻𝗶𝗻𝗴 𝗳𝗼𝗿 𝗗𝘆𝗻𝗮𝗺𝗶𝗰 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗠𝗼𝗱𝗲𝗹𝘀 at @DukeEcon! Thanks to @DanielYiXu @dix_rafael @CosminIlut David Berger for hosting. 🚀All slides+code are available here github.com/yangycpku/Machine…

I think you are VERY wrong for economic theory that matters. As others mentioned, taste/intuition truly matter in econ. Unlike math, there are no agreed upon big questions that can be solved w/ brute force. What you ask, how you model is key and AI lacks on them by methodology.

Excited to launch the revamped GRID website! grid-database.org/ GRID now covers 26 countries across 5 continents, with a brand-new visualization tool to explore income inequality, income risk, and mobility across countries, demographic groups, and over time. Follow us on X: @GRIDdatabase And on LinkedIn: linkedin.com/company/1435571… Please retweet and help us spread the word!

How can we use macro and micro data jointly to discipline HANK models? Florian Huber, Gary Koop, and I address this in “Beyond Aggregate VARs: A Bayesian Benchmark for HANK Models”. arxiv.org/abs/2609.06827

Why do governments wait until the fiscal crisis hits to act? Alesina & Drazen (1991) argue that stabilization delays aren’t irrational. They’re a war of attrition as groups fight to avoid bearing the cost. The Big Beautiful Bill is setting up the next round.

Donald Trump might say silly things and appear to put the Fed under pressure... ... In fact there are more interesting connections between fiscal and monetary policy than crude fiscal dominance in a high debt world ft.com/content/dda770b2-79b4…

Senza sostegno fiscale, la banca centrale dovrebbe abbassare i tassi anche con inflazione in aumento? No. Dovrebbe spiegare che lasciare correre l’inflazione per poi domarla può costare più di una correzione graduale dei conti pubblici. Questa è indipendenza.

A recent tweet by @lucasian76 pointed me to this beautiful, forceful 1991 piece by Summers, against pseudoscientific econometrics and for "pragmatic empiricism". His argument is close spirit to @DeirdreMcClosk and Leamer. I've always thought the profession rewards small, well-identified parameters far more than it rewards big "stylized facts." By big facts I mean Deaton's "deaths of despair" (it took a book, not a top-five paper) or Friedman and Schwartz's Monetary History. This is basically the point of this essay. Summers gives three reasons pragmatic empiricism along these lines has proved so influential. First, "the bottom line was a stylized fact or collection of stylized facts characterizing an aspect of how the world worked rather than parameter estimates or formal tests of a point hypothesis." Second, "pragmatic pieces of empirical work produce regularities of a kind that theory can seek to explain. Modigliani's finding that wealth entered the consumption function in an important way was suggestive for theories regarding the operation of fiscal and monetary policies. Friedman and Schwartz's work on money's effects continues to be important in spurring theoretical developments. Phillips' finding … has stood as a reality that any theory of the business cycle must confront." Third, "successful pieces of pragmatic empirical work have no scientific pretense. They start from a theoretical viewpoint, not a straitjacket. No single test is held out as decisive. Many different types of data are examined. … No single episode in A Monetary History was held out as decisive. No single test reported in Fama's survey proved or disproved anything, but a persuasive pattern emerged from the totality." faculty.econ.ucdavis.edu/fac…

This looks like a must-read! "Macro: The Economic Models That Shape Our World" by Greg Kaplan. amzn.to/4crAfnt "In clear and engaging prose, Chicago economist Greg Kaplan demystifies how our everyday behavior connects to the biggest questions in fiscal and monetary policy. Tracing the evolution of economic thinking from Keynes to today, he guides readers through the models used to explain our economy, uncovers their flaws, and reveals what cutting-edge research tells us about managing the economy in good times and bad. These earlier models are valuable, Kaplan argues, but those that underlie much of conventional wisdom are fundamentally out of touch with the realities of how people spend and save...The journey culminates in the HANK (Heterogeneous Agent New Keynesian) model, the current state of the art that is more consistent with reality. HANK accounts for our diverse spending and saving habits and will transform the way we think about economic policy. Written for anyone who wants to truly understand how our economy works, Macro is the long-overdue book that bridges the gap between pioneering research and real-world behavior." amzn.to/4crAfnt

Per spiegare bene l'inflazione, quali sono i meccanismi che la determinano, gli effetti sul potere d'acquisto, come la si combatte, ieri @RiccardoTrezzi ed io abbiamo avuto il piacere di ospitare su @liberioltre due grandi economisti: @monacelt e @LeonardoMelosi Enjoy piped.video/watch?v=t7lI-R9D…

Taxes on wealth or unrealized capital gains are a bad idea. Not just because of all the well-known implementation issues. But also in theory. Our paper, now forthcoming in Econometrica:

Extremely interesting post. No objection to the “humanizing” language: it's hard not to think of Agent Smith while reading about the incident.

Interesting ECB blog post - Demand side playing no role in HICP uptick, energy accounts for entirety of increase. ecb.europa.eu/press/blog/dat…