Working Papers
Decomposing the Investment Channel of Monetary Policy with M. Momm (link)
European Central Bank's Young Economist Prize 2026
Cambridge Finance Best Student Paper Award 2026
Monetary policy announcements simultaneously change borrowing costs and firms' expectations about future economic conditions. Conventional estimates of the investment response to monetary policy therefore conflate price effects with belief revisions and fail to identify the structural sensitivity of investment to financing conditions. We exploit quasi-experimental variation from the ECB's 2016 Corporate Sector Purchase Programme (CSPP), which created persistent cross-sectional differences in firms' financing costs through bond market segmentation, to isolate the causal effect of borrowing costs on firm investment. We find that investment elasticities estimated from aggregate monetary policy shocks understate the effect of a pure cost-of-debt shock by 38 percent over four quarters. Our results imply that the structural sensitivity of investment to borrowing costs is larger than previously thought, with direct implications for the calibration of quantitative macroeconomic models and heterogeneous real transmission of monetary policy. The gap reflects a sizable firm-level information effect. A simple model of firm investment with an information effect rationalizes this attenuation.
Presentations: ECB (Seminar), Chicago FED (Seminar), ASSA 2027 (Washington DC), ECB Forum on Central Banking 2026 (Sintra), EEA 2026 (Dublin), PSE-CEPR Policy Forum 2026, RAPS/RCFS Europe Conference 2026 (Cambridge), Theories and Methods in Macro 2026 (Montreal), Midwest Macro Spring 2026 (Milwaukee), EDGE Conference 2025 (Cambridge).
The Role of Penalties for Sovereign Default Expectations: Evidence from the Courts (link)
Runner-up of the Cambridge Finance Best Student Paper award 2024
Why do sovereigns repay foreign creditors when external enforcement is weak? This paper shows that direct economic default penalties - not just exclusion from financial markets - are a key determinant of repayment incentives. I exploit quasi-exogenous variation in the cost of default generated by US court rulings in sovereign default litigation. Identification comes from high-frequency responses in third-country sovereign bonds governed by US law whose issuers are not parties to the litigation. I find that a one percentage point increase in the recovery rate lowers the default probability by 19 basis points. I interpret these results in a dynamic model of international borrowing with endogenous default and endogenous debt recovery rates. Calibrated to match the empirical relationship between recovery and default, the model implies that a one percentage point increase in the cost of default lowers the default probability by 7.9 basis points. Under the model, higher default penalties further improve welfare by reducing borrowing costs and increasing sustainable debt capacity. This offers an explanation for why many emerging markets have been pursuing high-debt-high-default-cost regimes, heightening financial instability under probabilistic tail events.
Presentations: EEA-ESEM 2026 (Dublin), Midwest Macro Spring 2026 Conference (Milwaukee), RIEF Meeting 2026 (Paris), ASSA 2027 (poster; Washington DC), CEPR Paris Symposium 2024 (poster), 96th IAEC (Philadelphia), EUI (seminar).
Pushing on a String: The Role of the Information Effect [Draft available soon]
Transmission of monetary policy to the real economy is weakest in a recession when stimulus is most needed. This paper studies how aggregate state dependency in transmission can be explained by cyclicality in the information effect - belief revisions about economic fundamentals around monetary policy shocks. We disentangle monetary policy shocks from their information component using a structural vector autoregression. We find that investment responds less to monetary policy shocks with an information component during recessions than during booms. In contrast, we find no such difference for monetary policy shocks without an information component. We develop these results in a model of rational inattention, where we show that in bad times, firms are more incentivized to pay attention to information transmitted alongside monetary policy surprises.
Work in Progress
Call Me Maybe: Debt Management with Callable Perpetuities with M. Ellison, E. Faraglia and F. Velde
The Granular Origins of Financial Cycles with G. Carboni and P. Porcari