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Published: January 01, 2199

Published: August 14, 2015

Published: August 14, 2014

Published: August 14, 2013

Published: August 14, 2012

Macro Musings. January, 2024.

Street Signals. February, 2024.

Pitchfork Economics with Nick Hanauer. April, 2024.

Simply Put Podcast. May, 2024.

Range Widely with David Epstein. December, 2024.

Liberty Street Economics. August, 2014.

Liberty Street Economics. August, 2014.

Liberty Street Economics. August, 2015.

Employ America. September, 2021.

Inflation expectations play a key role in many influential macroeconomic models. Commentators and policymakers often use the results of, or structures from, these models without delving too far into the underlying methodology. However, on closer examination, it becomes clear that the standard models of “inflation expectations” are sharply at odds with the underlying data. As such, great caution should be exercised when making policy recommendations in response to reports of elevated “inflation expectations.” An unthinking reliance on these models may lead one to prefer tighter monetary policy than would be optimal for securing a robust labor market recovery.

Job Market Paper. November, 2021.

I assess the role of labor market monopsony—finitely-elastic firm-specific labor supply—in the context of a New Keynesian model. Previous work has theorized that this feature is a source of real rigidity, permitting New Keynesian models to feature flatter Phillips curves, and thus smaller (and more realistic) responses of inflation to demand shocks. First, I modify a basic New Keynesian model to include firm-specific labor, and calibrate the labor supply elasticities to micro-empirical estimates.Consistent with this mechanism serving as a source of real rigidity, firm-specific labor substantially reduces the slope of the Phillips curve relative to the perfectly competitive labor market benchmark. However, this depends strongly on the elasticity chosen, and requires distinguishing the firm-specific and aggregate labor supply elasticities, which previous work often fails to do. Second, I provide a cross-sectional empirical test for this mechanism. I estimate the firm-specific labor supply elasticity by industry in the Survey of Income and Program Participation using a dynamic monopsony model. I then estimate industry responses to monetary policy shocks. Contrary to the New Keynesian model, I find no evidence that industry differences in firm-specific labor supply elasticities lead to different industry price responses to monetary policy shocks. My results do not support the theory that firm-specific labor is a source of real rigidity.

Published at The Review of Economics and Statistics. December, 2021.

We use the high-frequency, decentralized implementation of Stay-at-Home orders in the U.S. to disentangle the labor market effects of SAH orders from the general economic disruption wrought by the COVID-19 pandemic. We find that each week of SAH exposure increased a state's weekly initial unemployment insurance (UI) claims by 1.9% of its employment level relative to other states. A back-of-the-envelope calculation implies that, of the 17 million UI claims between March 14 and April 4, only 4 million were attributable to SAH orders. We present a currency union model to provide conditions for mapping this estimate to aggregate employment losses.

Replication Data. VoxEU.

Employ America. July, 2022.

In this first piece of a series, we’re going to walk through an overview of the ways inflation statistics can diverge between countries and demonstrate just how difficult it is to establish apples-to-apples comparisons between aggregate inflation measures in different countries.

Employ America. August, 2022.

When we disaggregate the aggregate inflation statistics, we find that the sources of high inflation in the US and Europe are different.

Employ America. August, 2022.

We refute specific vacancy-backed arguments that the Federal Reserve will need to engineer a recession in order to bring inflation under control.

Employ America. October, 2022.

The Federal Reserve has given job vacancy data center stage in assessing the strength of the labor market. The theoretical and empirical issues with vacancies data show that this is a mistake. Worse, it is a mistake that embeds a clear directional bias today. While labor market indicators in general show a strong labor market recovery from the pandemic recession, vacancies-based metrics portray a far tighter labor market than other indicators. If the Fed fixates on openings, they are setting themselves up to deliver substantially more policy tightening than is warranted by more traditional – and reliable – indicators

Employ America. November, 2022.

Employ America. February, 2023.

Ball, Leigh and Mishra (2022) warned that the Fed’s inflation target was not likely to be achieved without substantial increases in unemployment or extremely optimistic assumptions. Since the paper was released, unemployment has remained low, vacancies have remained high, but inflation in both prices and wages came down quickly. Acknowledging that the model did not make unconditional predictions about inflation, I feed in the realized path of the variables that supposedly explain inflation, which the authors did not know at the time. Even with full access to the data since the time of publishing, the model does not predict the rapid disinflation that happened in 2022 Q4. While the path to returning to 2% inflation is likely to remain bumpy in the upcoming months, the fact that the model with full information does not forecast any disinflation should cast serious doubt on the use of reductive Phillips curve thinking in setting policy during this pivotal time, especially when the model calls for a substantial increase in joblessness to achieve disinflation.

Employ America. April, 2023.

Employ America. July, 2023.

Our view is that the “unit labor cost” measure is simply not a useful way of assessing the extent of labor cost pressures on inflation. One part of the ULC is just a price index, the growth of which is simply inflation itself; the other component, the labor share, does not have any clear relationship, whether in terms of its outright level or its growth rate, with inflation. In historical context, the labor share is low and has been declining over the past two years, and a non-inflationary recovery in labor shares is not out of the historical norm.

Barron's. August, 2023.

The recent sunny path of the economy stands in stark contrast to last year’s stormy forecasts from some of the biggest names in macroeconomics. Why were their models wrong?

Employ America. August, 2023.

Predictions that fighting inflation would require an increase in the unemployment rate went wrong. The flaws in these predictions can be traced back to three ideas: first, that vacancies are a good measure of labor market tightness; second, that inflation expectations posed a threat to inflation stability, and third, the reliance on the Phillips curve framework, which emphasizes a story around labor market pressures on inflation instead of supply-side stories. In this piece, I dive deeper into the finer details of two of the models behind those predictions. I show how their projections differed from reality and why the mechanisms of those models failed to predict the disinflation we’ve seen over the past year, even as the unemployment rate remained low.

Employ America. October, 2023.

We examine the question of whether monetary policy constrains the supply-side, and what that means for inflation. Powell is reluctant to discuss the issue head-on, but recent research suggests that monetary tightening has long-run negative effects on output, capital, and productivity. One explanation for this phenomenon is that tightening has substantial effects on investment in innovation, which can reduce supply in the long-run and work against the Fed on inflation in the medium-term. Fiscal policy can help by supporting innovation investment when monetary policy is tight. Recent data do indeed show a slowdown in private innovation investment since the Fed started to raise interest rates. This bodes poorly for longer-term prospects for growth and inflation, and weakens the case for higher interest rates. Fiscal policy has an opportunity to alleviate these stresses through the CHIPS Act and the Inflation Reduction Act.

Employ America. December, 2023.

While policymakers were never fully convinced of the arguments in favor of a hard landing, they still saw a recessionary increase in unemployment as a requirement for disinflation at the beginning of this year. In the months since, the Fed has backed away from this view, and has expressed increasing confidence in the possibility of a soft landing. In this piece, we look forward to the Fed’s game plan in 2024 as longtime advocates for supply-side disinflation and a soft landing for the labor market. Now that the Fed shares these goals, what risks lay ahead and what steps must they take to preserve the hard-earned recovery in the labor market? We present a path for the Fed in 2024.

Employ America. January, 2024.

As policymakers grapple with the challenge of achieving a soft landing, one underrated tool is reducing healthcare inflation. With healthcare costs projected to rise over the coming decade, a policy proposal that has been circulating is making Medicare reimbursements site-neutral. In this brief, we estimate the disinflation effects of implementing site-neutral payments for Medicare.

Published at The Review of Economic Studies. March, 2024.

We measure extensive-margin labor supply (employment) preferences in two representative surveys of the U.S. and German populations. We elicit reservation raises: the percent wage change that renders a given individual indifferent between employment and nonemployment. It is equal to her reservation wage divided by her actual, or potential, wage. The reservation raise distribution is the nonparametric aggregate labor supply curve. Locally, the curve exhibits large short-run elasticities above 3, consistent with business cycle evidence. For larger upward shifts, arc elasticities shrink towards 0.5, consistent with quasi-experimental evidence from tax holidays. Existing models fail to match this nonconstant, asymmetric curve.

The Odd Lots Newsletter. May, 2025.

President Trump hasn’t been shy about repeatedly calling for Federal Reserve Chair Jerome Powell to cut interest rates. If you were a lawmaker or policymaker outside the Fed, how would you try to lower inflation and, as a result, lower interest rates? There is an obvious — but underappreciated — sector to look for anti-inflationary fiscal policy: healthcare.

Employ America. August, 2025.

The 2020 Fed Framework changes around full employment were appropriate and an important part of achieving the full employment recovery seen after the pandemic. Blaming it for historically unique demand- and supply-side inflationary shocks misses the mark.

Employ America. September, 2025.

Just as healthcare cost control played a role in the economic boom of the 1990s, adopting these policies and reducing healthcare inflation could help deliver another era of macroeconomic success today.

Employ America. September, 2025.

Legislative proposals to implement site-neutral payments differ in their scope, and as such, the disinflationary impact of these proposals varies. Proposals that implement site-neutral payments on a larger scale will similarly have a larger effect on healthcare and overall inflation.

Published in Journal 1, 2009.

Published in Journal 1, 2010.

Published in Journal 1, 2015.

Published: March 01, 2012

Published: March 01, 2013

Published: February 01, 2014

Published: March 01, 2014

Undergraduate course, University 1, Department, 2014.

Workshop, University 1, Department, 2015.