Research
Journal publications
"Expectations about the Federal Reserve’s Balance Sheet and the Term Structure of Interest Rates," with Jane Ihrig, Elizabeth Klee, Canlin Li, and Min Wei. International Journal of Central Banking, 14(2): 341-390. 2018.
https://www.ijcb.org/journal/ijcb18q1a8.htm
Working Papers
The fiscal effect of large central bank balance sheets and interest rate policy amplification (JMP)
Abstract: This paper provides evidence that interest rate policy under a framework of abundant reserves has an additional counter-cyclical fiscal effect compared to a scarce reserves operating framework. When lowering interest rates with abundant reserves, the central bank makes profits on its portfolio of assets which eases the budget constraint of the fiscal authority. Likewise, when raising interest rates with abundant reserves, central bank net income declines leading to a tightening of the balance sheet of the fiscal authority. This is in direct contrast to a scarce reserves central bank balance sheet in which interest rates and central bank net income is positively correlated. This paper uses an illustrative model with static reserve demand to show that due to central bank net income, economies with larger central bank balance sheets experiences fewer cumulative fluctuations in response to identical shocks. Additionally a quantitative model is used and explicitly models bank reserve demand and the central bank net interest income mechanism. Results from this model show that if a central bank attempts to minimize fluctuations ``naively" by ignoring the central bank net income fiscal channel, cumulative economic fluctuations depend on whether reserves are scarce, ample, or abundant.
Works in Progress
Time consistent deposit insurance (w/ Gaetano Antinolfi)
Fiscal support in defending exchange rate policies (w/ Joao Hernández)
The financial and real impacts of QE, disentangling supply and ``reverse-supply" channels (w/ Julieta Yung)
Estimating the Forward Guidance channel of QE (w/ Leifei Lyu)
Monetary policy reaction functions and asymmetric interest rate smoothing (w/ Scott Abrahams and Isaac Green)
Other publications
"Bitcoin’s decentralized decision structure," with Ben Craig. Federal Reserve Bank of Cleveland Economic Commentary. 2019-12.