Working Papers

Decomposing the Investment Channel of Monetary Policy with M. Momm (link)

Finalist in the European Central Bank's Young Economist Prize 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 33 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. The gap reflects a sizable firm-level information effect. A model of lumpy firm investment with an information effect rationalizes this attenuation: information effects are quantitatively important when a sufficient mass of firms lies near their investment threshold.

Presentations*: Spring 2026 Midwestern Macro Meeting (MMM), Theories and Methods in Macro (T2M) 2026, ECB Forum on Central Banking 2026, 41st Meeting of the European Economic Association (EEA) 2026, PSE-CEPR Policy Forum 2026, The IAAE Annual Conference 2026, EDGE Conference 2025, European University Institute

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*: Spring 2026 Midwestern Macro Meeting (MMM), Econometric Society European Summer Meetings (EEA-ESEM) 2026, RIEF Meeting 2026, CEPR Paris Symposium 2024, 96th International Atlantic Economic Conference, Philadelphia, PA, USA. European University Institute.

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. 

*Including scheduled.

Work in Progress

Debt Management with Callable Bonds: A Historical and Theoretical Perspective with M. Ellison, E. Faraglia and F. Velde

Supply and Demand Factors in the Euro Area Bond Markets with G. Carboni

Policy Publications

Benchmarking Dynamically Stable Public Debt Trajectories for Low-Income Countries with P. K. Iossifov and A. Abbas, IMF Working Paper Series (2026) (link)

In this paper, we develop two complementary approaches for benchmarking the public debt trajectories of Low-Income Countries (LICs) to assess their dynamic stability. We compare the evolution of the overall public debt-to-GDP ratios of reference LICs with the historical experiences of other countries with similar characteristics, which are now further down the path of economic development and have not experienced public debt stress events. We rely on both direct comparison and a novel application of the synthetic control method (SCM). These public debt trajectories that are dynamically stable from a historical perspective can provide insights into debt sustainability analyses for LICs.

Presentations: IMF Sovereign Debt Workshop (2024, 2026)

The COVID-19 crisis: what explains cross-country differences in the pandemic’s short-term economic impact with I. Pitterle, UN Working Paper Series (2021) (link)

The COVID-19 pandemic has caused the most universal health and socio-economic crisis in recent history. However, the magnitude of the economic damage has differed widely; some countries were hit particularly hard, while others have managed to weather the storm much better. In this paper, we use cross-country regression analysis to identify factors that help explain the differences in the growth impact of the COVID-19 shock. Our findings underscore the critical role of balancing health and economic concerns in managing the pandemic as both a country’s exposure to the coronavirus and the stringency of containment measures are strongly correlated with its growth performance. In addition, our results shed light on several aspects of economic resilience. Good governance, provision of fiscal support and strong macroeconomic fundamentals all helped cushion the economic impact. By contrast, a lack of economic diversification – reflected in overreliance on the tourism sector or oil production – has significantly amplified the shock.