Research
Publication
Should monetary policy care about redistribution? Optimal fiscal and monetary policy with heterogeneous agents Paper · First version 2018/01. This version 2025/05 · Accepted at the Review of Economic Studies )
We present a method to determine optimal monetary policy in heterogeneous-agent economies with nominal frictions and aggregate shocks, under various assumptions regarding fiscal policy. We analyze models with either sticky prices or sticky wages. In the sticky-price economy, when fiscal policy is optimally set, optimal monetary policy implements price stability. Inflation volatility remains low when fiscal policy follows empirically relevant rules. In the sticky-wage economy, optimal price inflation becomes significantly more volatile, while wage inflation remains small. Under both types of nominal rigidity, agents with lower productivity tend to benefit more from optimal monetary policy.
Working Papers
Heterogeneous Firm Expectations and Misallocation Paper · September 2026 · CEPR Discussion Paper 20944
This paper examines how heterogeneity in firms’ forecasting accuracy contributes to resource misallocation. Using French quarterly survey data on firm expectations matched with administrative data, we show that forecast errors significantly affect investment and hiring decisions, leading to dispersion in the marginal revenue products of capital (MRPK) and labor (MRPL). Firms that underpredict demand exhibit MRPK and MRPL levels that are 5.7% and 4.1% higher, respectively, than those observed when demand forecasts are accurate, reflecting underinvestment and underhiring. These effects are persistent over time and are not solely driven by idiosyncratic shocks.
Firms' Marginal Propensities to Invest Paper · September 2026 ·
Few heterogeneous-firm models are calibrated to firms’ responses to income shocks because estimates of these responses are lacking. We estimate the average marginal propensity to invest (MPI) of firms in the US, that is, the share of a transitory sales shock that firms use for investment. In Compustat data, the dynamics of firms’ sales are well described by a transitory-permanent process, so a semi-structural approach can identify the response of investment to transitory sales shocks. This response is statistically significant and the average MPI is 0.22. Younger firms, smaller firms, and non-dividend-paying firms exhibit significantly higher MPIs. Given that Compustat over-represents older and dividend-paying firms,our result is a lower bound on the response over the universe of firms. Our heterogeneity analyses make it possible to infer results for other sets of firms. .
Work in Progress
Exact Identification of Demand and Supply Shocks: Theory and Evidence from Observed Innovations in P and Q
Draft in progress.
Monetary Policy Channels and Investment Plans
Draft in progress.
Financial Market Participation
Draft in progress.
When should we tax firms? Optimal corporate taxation with firm heterogeneity
This paper studies the design of optimal fiscal policy in a heterogeneous firm environment when the economy is hit by aggregate shocks. My main result is that the variation in the optimal tax rate depends on the variation in capital misallocation. When calibrated to the U.S. economy, I show that misallocation decreases after a positive aggregate shock, and that the optimal tax rate is countercyclical.