Job Market Paper
"Decomposing HANK", November 2023
Abstract: This paper introduces a decomposition of the responses of macroeconomic variables to aggregate shocks in heterogeneous-agent New Keynesian (HANK) models. I decompose these responses into representative-agent (RANK) and redistribution effects. To obtain RANK effects, I introduce counterfactual transfers that counteract the redistribution triggered by the aggregate shock and ensure that all agents have the same consumption responses. In this case, the responses of the HANK model are equivalent to those of a (fictitious) RANK model. I show the existence of such transfers in various heterogeneous-agent models. Redistribution effects are derived from the HANK model's response to the redistribution shock backup from the counterfactual transfers. Further analysis of these transfers analytically breaks down the redistribution shock into five channels: income exposure, interest rate exposure, tax exposure, asset price, and liquidity. I apply this decomposition to monetary policy shocks and quantitatively assess the contribution of each redistribution channel to the differences between HANK and RANK.
Conferences: Qatar Center for Global Banking and Finance Annual Conference 2023 in King's College London; 2023 Asian Meeting of the Econometric Society in Singapore; EEA-ESEM 2023 in Barcelona; 27th Conference Theories and Methods in Macroeconomics (T2M) 2024 in Amsterdam; EABCN Conference: New Challenges in Monetary Economics (poster session) in Mannheim; 2024 Chinese Economists Society (CES) China Annual Conference in Hangzhou, China.
Awards: Finalist QCGBF Young Economist Prize Competition 2023.
Abstract: This paper introduces a decomposition of the responses of macroeconomic variables to aggregate shocks in heterogeneous-agent New Keynesian (HANK) models. I decompose these responses into representative-agent (RANK) and redistribution effects. To obtain RANK effects, I introduce counterfactual transfers that counteract the redistribution triggered by the aggregate shock and ensure that all agents have the same consumption responses. In this case, the responses of the HANK model are equivalent to those of a (fictitious) RANK model. I show the existence of such transfers in various heterogeneous-agent models. Redistribution effects are derived from the HANK model's response to the redistribution shock backup from the counterfactual transfers. Further analysis of these transfers analytically breaks down the redistribution shock into five channels: income exposure, interest rate exposure, tax exposure, asset price, and liquidity. I apply this decomposition to monetary policy shocks and quantitatively assess the contribution of each redistribution channel to the differences between HANK and RANK.
Conferences: Qatar Center for Global Banking and Finance Annual Conference 2023 in King's College London; 2023 Asian Meeting of the Econometric Society in Singapore; EEA-ESEM 2023 in Barcelona; 27th Conference Theories and Methods in Macroeconomics (T2M) 2024 in Amsterdam; EABCN Conference: New Challenges in Monetary Economics (poster session) in Mannheim; 2024 Chinese Economists Society (CES) China Annual Conference in Hangzhou, China.
Awards: Finalist QCGBF Young Economist Prize Competition 2023.
Working Papers
"Inequality and Monetary Policy in a Lucas Island Model", 2021
This paper studies how the heterogeneity in marginal propensities to earn (MPE) affects output's response to money supply shocks in a Lucas Island model. The simplicity of the Lucas Island model allows me to obtain an analytical solution and solely focus on the role of MPE. Compared to the benchmark case in which wealth inequality is absent, the output’s response is dampened. Redistribution from rich households to poor households due to inflation decreases aggregate labor supply because the decrease in poor households’ labor supply dominates the increase in rich households’ labor supply. The labor supply of poor households is more responsive to redistribution, resulting in a negative correlation between MPE and redistribution.
This paper studies how the heterogeneity in marginal propensities to earn (MPE) affects output's response to money supply shocks in a Lucas Island model. The simplicity of the Lucas Island model allows me to obtain an analytical solution and solely focus on the role of MPE. Compared to the benchmark case in which wealth inequality is absent, the output’s response is dampened. Redistribution from rich households to poor households due to inflation decreases aggregate labor supply because the decrease in poor households’ labor supply dominates the increase in rich households’ labor supply. The labor supply of poor households is more responsive to redistribution, resulting in a negative correlation between MPE and redistribution.
"Tacit Collusion of Partial Cross Ownership Under Cournot Competition", 2020, SSRN
Partial cross ownership (PCO) among firms affects their incentives to engage in tacit collusion. I analyze the collusion behavior in an n-firm industry featuring a cross-ownership network, under Cournot competition. I find that increasing PCO can hinder tacit collusion under the uniform output distribution scheme. However, this scheme is not always feasible for collusion. I examine different subgame perfect equilibriums and conclude that tacit collusion can be facilitated when PCO increases.
Partial cross ownership (PCO) among firms affects their incentives to engage in tacit collusion. I analyze the collusion behavior in an n-firm industry featuring a cross-ownership network, under Cournot competition. I find that increasing PCO can hinder tacit collusion under the uniform output distribution scheme. However, this scheme is not always feasible for collusion. I examine different subgame perfect equilibriums and conclude that tacit collusion can be facilitated when PCO increases.
Research Notes
"An Example of Two-side Commitments in Bayesian Persuasion", 2021
I discuss the condition under which one player's optimal commitment is also her response to another player's optimal commitment in Bayesian persuasion. I conjecture that the Sender's optimal commitment is a dual problem of the Receiver's optimal commitment (and vice versa) when there is a positive probability that the players cannot respond optimally. I also discuss the interpretation of this restriction in realistic settings.