Areas of interest: Macroeconomics, Public Finance, Monetary and Financial Economics.
Working Papers
Job Market Paper
(joint with Pedram Nezafat)
Abstract
Existing dynamic general equilibrium models have failed to explain
the high volatility of asset prices that we observe in the data.
We construct a general equilibrium model with heterogenous firms
and financial frictions that addresses this failure. In each period only a fraction of firms can start new projects,
which cannot be fully financed externally due to a financial
constraint. We allow the tightness of the financial constraint to
vary over time. Fluctuations in the tightness of the
financial constraint result in fluctuations in the supply of
equity and consequently in the price of equity. We calibrate the
model to the U.S. data to assess the quantitative importance of
fluctuations in the tightness of the financial constraint. The model generates a volatility in the price of equity
comparable to the aggregate stock market while also fitting key
aspects of the behavior of aggregate quantities.
(joint with Kevin Wiseman)
Abstract
Simple theories about why parents give money to their children fail to explain a central puzzle
in inter-generational transfers: While they are alive, parents give more money to their poorer
children. When they leave bequests, most parents divide money equally among their children.
We develop a model in which parents differentiate between gifts and bequests to help their
children more effectively. Parents are able to use future income uncertainty to provide the
children with more help and better incentives. We show that in our model poor children get
more in gifts than richer children and bequests are equal for all children under some parameterizations.
We build a richer quantitative model to compare the explanatory power of our model as compared with
a perfect altruism model when parameters are picked to match US income and wealth data.
We find that our model significantly reduces the costs needed to rationalize equal division of bequests.
Slides from my presentation at the University of Chicago.