IFDP 2025-1418 ICYMI: New #IFDPPaper: Geopolitical Risk and Global Banking: federalreserve.gov/econres/i… #EconTwitter

Highly interesting! "Geopolitical Risk and Global Banking" by Friederike Niepmann and Leslie Sheng Shen. "How do banks respond to geopolitical risk, and is this response distinct from other macroeconomic risks? Using U.S. supervisory data and new geopolitical risk indices, we show that banks reduce cross-border lending to countries with elevated geopolitical risk but continue lending to those markets through foreign affiliates—unlike their response to other macro risks. Furthermore, banks reduce domestic lending when geopolitical risk rises abroad, especially when they operate foreign affiliates." bostonfed.org/publications/r…

New #FEDSNote: Corporate Cash Accumulation During the COVID-19 Pandemic: federalreserve.gov/econres/n… #EconTwitter

Super interesting! "Heterogeneous intermediaries in the transmission of central bank corporate bond purchases" by Fédéric Holm-Hadulla and Matteo Leombroni. "This paper studies the role of financial intermediaries in the transmission of central bank corporate bond purchases to bond yields. Contrary to standard expectations, we find that mutual funds—typically viewed as price-elastic investors—amplify, rather than dampen, the effects of these interventions on bond spreads." ecb.europa.eu/pub/pdf/scpwps…

Super interesting! "Turning Points in Inflation: A Structural Breaks Approach with Micro Data" by Alberto Cavallo and Gaston Garcia Zavaleta. "We introduce a novel methodology for detecting inflation turning points that combines high-frequency, disaggregated price data with standard structural break techniques to provide policymakers with more timely and precise signals of inflation dynamics. ...For the U.S., we find evidence of a turning point in February 2025, with significant sectoral inflation accelerations despite stable aggregate inflation measures. These applications demonstrate the utility of our approach for enhancing real-time inflation monitoring and policy decision-making." nber.org/papers/w34102

The first cohort of Stripe econ of AI fellows: ( thread, with some thoughts on the state of the field)

Thrilled to have presented my JMP “Wealth Inequality and Labor Mobility: the Job Trap” at @CebraOrg Annual Meeting! Thanks to @BostonFed & @HarvardHBS for hosting, and special thanks to @IlariaSupino for organizing the session. Shoutout to @albertocavallo for an amazing keynote!

Food for thought! "Macroeconomic and Fiscal Consequences of Quantitative Easing" by Tobias Adrian, Christopher J. Erceg, Marcin Kolasa, Jesper L Linde, and Pawel Zabczyk. "...we show how QE can provide a sizeable boost to output and inflation in a deep liquidity trap and can reduce public debt substantially. This contrasts to the rise in public debt that occurs under fiscal expansion and makes QE an attractive tool in a high debt environment. There is more reason for caution in using QE in a “shallow" liquidity trap in which the notional interest rate is only slightly negative: QE runs more risk of causing the economy to overheat, especially if forward guidance has a strong element of commitment, and is more likely to generate sizeable central bank losses. Some refinements in strategy, including the use of escape clauses, can help mitigate overheating risks." imf.org/en/Publications/WP/I…

ICYMI: New #FEDSPaper: The Theory of Financial Stability Meets Reality: federalreserve.gov/econres/f… #EconTwitter

Best book I’ve read in a very long time Inspiring in a way similar to Surely You’re Joking Mr Feynman Every technical founder should read

I had a great time at the 2025 @CebraOrg conference in Boston - huge thanks to the organisers and hosts @HarvardHBS @BostonFed ! I presented "Intertemporal Pass-Through", joint work with @mickey_gb and @boromeusw

A great summary of my work on r*!

Highly relevant! "Indirect Credit Supply: How Bank Lending to Private Credit Shapes Monetary Policy Transmission" by Sharjil Haque, Young Soo Jang, and Jessie Jiaxu Wang. "This paper examines how banks’ financing of nonbank lenders affects monetary policy transmission. ...Overall, while bank lending to nonbanks mitigates credit contraction and supports investment during tightening, it amplifies monetary transmission by elevating borrowing costs and financial distress risk." federalreserve.gov/econres/f…

So many important discussions about central bank independence. It's high time to have another look at interesting articles and books like this one! "Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State" by Paul Tucker. "Unelected Power lays out the principles needed to ensure that central bankers and other independent regulators act as stewards of the common good. Blending economics, political theory, and public law, this critically important book explores the necessary conditions for delegated but politically insulated power to be legitimate in the eyes of constitutional democracy and the rule of law." press.princeton.edu/books/pa…

🎓 Today I delivered the final lecture of @Penn_Exchange’s Foundations of Economic Thought summer course by focusing on the evolution of macroeconomics from 1970 to 2000: 🔗 sites.google.com/view/founda… 🧠 Unsurprisingly, @UMN_Econ features prominently in the story (although @penneconomics also shows up quite a few times). 📑 You can find the slide deck here: sas.upenn.edu/~jesusfv/ET_5_…

Wow, highly relevant! "Integrating balance sheet policy into monetary policy conditions" by Benoit Mojon, Phurichai Rungcharoenkitkul, and Dora Xia. "This paper introduces a new Monetary Policy Conditions Index (MCI) that integrates conventional and unconventional monetary policy tools into a unified measure. The MCI is a weighted average of short-term interest rate and central bank balance sheet size, improving upon the shadow rate by capturing balance sheet policy effects away from the effective lower bound." bis.org/publ/work1281.htm

Super interesting! Jordi Galí delivers the 2025 Keynes Lecture at the University of Cambridge on ‘Rethinking the New Keynesian Model’ youtube.com/watch?v=I0QdP1Q4… There is also a short interview with Jordi Galí: youtube.com/watch?v=vrlvJwOH…

I’m building a new team at @GoogleDeepMind to work on Open-Ended Discovery! We’re looking for strong Research Scientists and Research Engineers to help us push the frontier of autonomously discovering novel artifacts such as new knowledge, capabilities, or algorithms, in an open-ended self-improving loop. We aim to work on ambitious research projects in a fast-paced manner. If this sounds appealing to you, apply using the link below by Friday, August 1st EOD: job-boards.greenhouse.io/dee…

One of my favorite economics papers. Fundamentally shaped the way I think about markets. journals.uchicago.edu/doi/ep…

Inspiring! "Central Banks as Educators" by Carola Binder. "With the shift toward expectations management as a monetary policy tool, central banks’ educational role has become a central component of their monetary policymaking, and central bank communication with the public has become a rapidly-growing area of research. I argue that this research is closely related, both thematically and methodologically, to the field of educational psychology." nber.org/papers/w34002