with Francesco Beraldi and Chenping Yang
Presented at the Italian Econometric Association, University of Naples, Boston College, Sveriges Riksbank, University of Turin, HEC Paris, Uppsala University, Bank of Italy, Crest Paris, ifo Institute.
We study the role of information heterogeneity in determining capital flows during the global financial cycle. When global uncertainty increases, investors retrench toward their home country and the United States. We build a model of portfolio choice and information acquisition with varying learning costs across countries. Our model replicates the global financial cycle’s stylized facts and has new predictions for forecasting accuracy, which we test using micro forecast data. Domestic forecasters better predict their own country’s economic outcomes, especially with increased global uncertainty. However, the US is an exception, where domestic forecasters do not outperform foreign institutions.
with Marco Errico and Luigi Pollio
Presented at the Spring 2023 GLMM BC-BU, at the Federal Reserve Bank of Boston, at the IEA, at the Midwest Macro Meeting (Fall 2023) and at the Econometric Society Conference (Fall 2023), Dynare Conference (2025).
Managers face strong pressure to meet analysts’ earnings forecasts, but the effects on firms and consumers are ambiguous. In the data, firms that just meet earnings forecasts raise markups by 1.3 percent and report weaker customer sentiment than those that just miss, consistent with short-term incentives distorting both short-run pricing decisions and long-run customer acquisition. We develop a dynamic general equilibrium model with heterogeneous firms and endogenous customer accumulation, where short-term incentives emerge endogenously as an optimal mechanism to discipline managers’ private benefit. We estimate that short-termism leads the average firm to raise markups by 20 basis points and annual profits by 1.2 percent. Consumers experience a 7-basis-point annual increase in consumption and a 1.2 per-cent gain in lifetime utility, as income effects outweigh the welfare costs of higher prices.
with Elisa Luciano
Presented at the HEC Brown Bag Seminar Series and at the 6th Bank of Italy-LTI Conference, June 2025.
This paper examines how changes in sector-level CO2 emissions affect corporate borrowing costs. Using firm-level financial data from Compustat merged with EPA emissions data (2012-2023), we construct industry-level environmental growth rate. Panel regressions with firm and year fixed effects show that higher emissions are associated with increased interest rates, especially in carbon-intensive sectors. We interpret these findings through a theoretical production network model, where environmental shocks propagate via input linkages. Our results suggest that transition risks are priced into corporate debt markets, highlighting the financial relevance of climate exposure and the role of supply chain structure.
Market Structure and the Pass-Through of Import Price Shocks
with Mathias Klein
Presented at Boston College, Sveriges Riksbank, Collegio Carlo Alberto.
This paper investigates how idiosyncratic import price shocks transmit to domestic prices, with a focus on the roles of firm heterogeneity, market structure, and data granularity in shaping pass-through dynamics. Using detailed monthly data from Swedish firms, we construct a network-adjusted measure of effective import prices that captures both direct and indirect exposure to international cost shocks. Our findings reveal that pass-through is substantial and gradual, approaching full transmission over a one-year horizon. We uncover an inverted U-shaped relationship between market share and pass-through, consistent with strategic interactions in pricing. Firms with intermediate market power pass through the largest share of cost shocks, while those with low or high market shares show attenuated responses. We also demonstrate that standard pass-through estimates relying on aggregate import price indices suffer from significant attenuation bias. These results underscore the importance of firm-level heterogeneity and production network linkages in understanding inflation dynamics. From a policy perspective, our findings suggest that accurate inflation assessment and effective stabilization require granular data and attention to firm behavior within concentrated and upstream industries.
Central Banks and the Wage-Price Spiral Conflict
with Michele Boldrin
This paper examines the conflict that arises from frictions between private, fiscal, and monetary sectors in shaping inflation dynamics. When agents misperceive individual and aggregate shocks, competing claims over income shares can trigger persistent inflationary pressures. We study how these tensions interact with fiscal policy and how monetary policy ultimately acts as the last line of defense in stabilizing the system. The model highlights that the effectiveness of monetary interventions depends on how the expansion of central bank balance sheets is transmitted through banks and government finances. We then confront these mechanisms with data to assess the empirical relevance of the theoretical predictions.
Bank Risk Taking under Secular Stagnation
with J. Christina Wang
This paper examines how a prolonged period of low and stable interest rates shaped banks’ maturity and liquidity risk exposures, contributing to the 2023 U.S. regional banking turmoil. Using an overlapping generations (OLG) framework, we link the secular decline in interest rates and post-crisis regulation, which focused primarily on credit rather than interest rate risk, to banks’ incentives to hold long-term fixed-rate assets financed by uninsured deposits. The model quantifies the macroeconomic consequences of this behavior and evaluates alternative policy responses, including liquidity facilities and capital regulation.