Research

Work in progress

Ripple effects of monetary policy,  with E. Garcia-Appendini and S. Ongena
We study how monetary policy transmits through the demand and supply of intermediate goods. We document that downstream and upstream corporate financial health are instrumental for the transmission of monetary policy. Changes in monetary conditions have a quantitatively larger impact on firms’ operations through the changes in demand induced by clients’ financial health (demand channel of transmission), and through the changes in supply induced by suppliers’ financial health (cost channel of transmission), than through the firms’ own balance sheets. Our estimates suggest that the cost channel may be more potent than the demand channel of transmission.

Monetary policy and endogenous financial crises,  with F. Collard, J. Gali, and C. Manea
Excessive economic booms may lead to financial crises and severe recessions. We study whether central banks should systematically curb such booms to prevent crises, i.e. “lean against the wind”, even though this may come at the cost of inefficient volatilities in inflation and/or output. We tackle this question using a textbook New Keynesian model augmented with endogenous capital accumulation and micro–founded financial crises. We solve our model globally to allow the economy to depart persistently from its steady state and to feature boom–driven crises.

Working papers

Dealing with bank distress: insights from a comprehensive database, with K. Adler
We study the effectiveness of policy tools that deal with bank distress (i.e. central bank lending, asset purchases, bank liability guarantees, impaired asset segregation schemes). We present and draw on a novel database that tracks the use of such tools in 29 countries between 1980 and 2016. To keep “all else” equal, we test whether different policies explain differences in how countries fared through bank distress episodes that feature observationally similar initial macro–financial vulnerabilities.

Macroeconomics of bank capital and liquidity regulations, with F. Collard
A quantitative macro model to study the transmission channels of capital and liquidity regulations, how these regulations interact and  whether they have unintended effects. The paper also offers some guidance as to how capital and liquidity regulations should be coordinated.

Financial imbalances and financial fragility
Financial integration overall improves the allocation of world savings, but also entails capital flows from less financially developed to more financially developed countries. When the latter do not have the capacity to absorb those flows, a financial crisis may break-out, and spread internationally.

Credit chains and the propagation of financial distress
How an adverse liquidity shock may propagate when firms borrow from and lend to each other, in a trade credit chain.  Following the shock, illiquid firms may become insolvent.

Credit rationing, output gap, and business cycles
An early version of a real business cycle model with Kiyotaki and Moore (1997)’s collateral constraint