with F. Beraldi and C. Yang
Presented at the Italian Econometric Association, University of Naples PhD Workshop, Boston College, Sveriges Riksbank, University of Turin, HEC Paris, Uppsala University, Bank of Italy, Crest Paris, ifo Institute.
This paper investigates the role of information heterogeneity in driving equity flows throughout the global financial cycle. In periods of heightened uncertainty, investors retrench from most of foreign markets while maintaining investment in information-advantaged economies, particularly in the United States. We develop a multi-country model with endogenous information acquisition and heterogeneous learning costs, which generates three key predictions in uncertain times: (i) domestic investors become relatively better informed; (ii) aggregate foreign equity inflows fall where domestic agents hold an informational advantage; and (iii) investors reallocate toward markets they understand better. We validate these predictions using Consensus Economics forecasts and both aggregate and bilateral equity inflows. Higher uncertainty widens information asymmetries and leads to weaker foreign inflows where domestic precision improves, while capital shifts toward destinations that are easier to learn about.
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 E. 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.
Network-Adjusted vs Aggregate Import Price Pass Through
with M. Klein
Presented at Boston College, Sveriges Riksbank, Collegio Carlo Alberto.
We study how import price shocks propagate through domestic production networks and affect firm-level pricing behavior in Sweden. Leveraging a novel network-based measure of effective import prices that accounts for both direct and indirect exposure via input-output linkages, we show that pass-through to domestic prices is gradual: a one percent increase in import costs leads to roughly one-to-one price adjustments over a 12-month horizon. This highlights the importance of incorporating production-network heterogeneity to accurately quantify cost transmission. We then examine within-industry heterogeneity, documenting an inverted U-shaped relationship between market share and pass-through. Smaller firms adjust prices less in response to imported cost shocks, while medium-sized firms exhibit stronger responses, and the largest firms show diminishing marginal pass-through, reflecting strategic considerations, pricing frictions, and competitive constraints. Finally, we explore across-industry variation and find that sectors characterized by higher market concentration and those producing intermediate goods experience stronger and more persistent pass-through. These findings underscore the role of structural industry characteristics in shaping the transmission of international cost shocks and demonstrate that aggregation and coarse measures of import prices can substantially understate the true inflationary impact of global price changes.
Central Banks and the Wage-Price Spiral Conflict
with M. 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. C. 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.