I am a macroeconomist working in the areas of monetary policy and financial regulation.
There is currently a debate about what price index central banks should target when economies are open and exposed to international price shocks. This paper derives the optimal price index by solving the Ramsey problem in a New Keynesian small open economy model with an arbitrary number of sectors. This approach improves on existing theoretical benchmarks because (1) it makes an explicit distinction between the consumer price index (CPI) and the producer price index (PPI), and (2) it allows exogenous international price shocks to play a role. Qualitatively, I use the analytical expression of the optimal price index to discuss that popular indices, such as the PPI and the core/headline CPI, are suboptimal because they ignore the heterogeneity in price stickiness and the effect of inflation on the trade surplus. Quantitatively, I calibrate a 35-sector version of the model for 40 countries and show that stabilizing the optimal price index yields significantly higher welfare than alternative indices.
Intensive Margin of the Volcker Rule: Price Quality and Welfare, (with Sakai Ando), conditionally accepted, Journal of Financial Intermediation
We analyze the impact of dealer regulation on price quality (informativeness and volatility) and its implications for the welfare of market participants. We argue that although price informativeness, volatility, and the dealers profitability all deteriorate, against conventional wisdom, other market participants are better off due to the dealer’s risk-shifting motive. A static model is used to clarify the main intuition, and the robustness of the welfare results, as well as the fragility of the conventional wisdom about price quality, are discussed by incorporating dynamics and endogenizing information acquisition.
Constrained Efficiency of Competitive Entrepreneurship, (with Sakai Ando)
We study the constrained efficiency of a competitive entrepreneurship model. It is shown that, even when the only friction is uninsurable entrepreneurial risks and agents are risk-averse, the competitive market can generate too many entrepreneurs. A notable feature of the model is that the equilibrium is characterized by an indifference condition instead of a marginal condition. Due to this unique feature, we can obtain a much sharper intuition of the constrained inefficiency than the previous literature. To illustrate this point, we contrast the competitive entrepreneurship model with a simple version of the Aiyagari model.
Estimating the Welfare Gains from E-Commerce: A Price Arbitrage Approach, (with Yoon J. Jo and David E. Weinstein)
This paper uses the universe of e-retail sales data from the Japan’s largest e-retailer (Rakuten) to compute the e-retail intensity of all goods in the Japanese economy. We match these data with the underlying price quotes for the 312 products sold in 65 Japanese cities each year that form the basis of the goods portion of the Japanese consumer price index. Following Jensen (2007) and Steinwender (2018), we model the introduction of e-retail as a technology that generates welfare gains by arbitraging away price differentials across locations. We find that the rate of interregional price convergence increased substantially for goods traded intensively online but not for other goods. Our estimates suggest that Japanese welfare rose by 102 billion yen per year as a result of eliminating these distortions. In addition, the implied impact on average prices through reduced markups and efficiency gains raised consumer surplus by approximately 3 trillion yen or one percent of consumer expenditures.
- 2015 Fall Introduction to Econometrics I (Ph.D. level), Columbia University, Teaching Assistant for Prof. Jushan Bai. Wueller Teaching Award (Teaching evaluations)
- 2016 Spring Public Economics, Columbia University, Teaching Assistant for Prof. Francois Gerard. (Teaching evaluations)
- 2016 Fall Economic Development of Japan, Columbia University, Teaching Assistant for Prof. David Weinstein. (Teaching evaluations)