Publications
Monetary Policy and Exchange Rate Dynamics in a Behavioral Open Economy Model
with Marcin Kolasa and
Pawel Zabczyk.
Journal of International Economics 155: 104087 (2025).
We analyze the implications of adding boundedly rational agents à la Gabaix (2020) to the canonical New Keynesian open economy model. We show that accounting for myopia mitigates several “puzzling” aspects of the relationship between exchange rates and interest rates and helps explain why some of them only arise in the nested case of rational expectations. Bayesian estimation of the model demonstrates that high degrees of “cognitive discounting” significantly improve empirical fit. We also show that this form of bounded rationality makes positive international monetary spillovers more likely and exacerbates the unit root problem in small open economies with incomplete markets.
Work in Progress
Financial Frictions and Monetary Policy in an Open Economy Model
with Francesco Zanetti.
Inequality and Welfare in a HANK model
with Jihene Arfaoui.
New Keynesian Model of Debt and Equity without Rational Expectations
with Bruce Preston and
Stefano Eusepi.
Optimal Monetary Policy and Bounded Rationality
with Marcin Kolasa and
Pawel Zabczyk.
Fiscal Consolidation and Bounded Rationality
with Hyungseok Joo.
Linear-Quadratic Approximation of a Small Open Economy New Keynesian Model
with Leilane Cambara and
Paul Levine.
Habit, Finite-Horizon Learning and Imperfect Credibility in a New Keynesian Model
Discussions
Endogenous Cognitive Discounting
by James Moberly.
Monetary Policy in a Small Open Economy with Multiple Monetary Assets
by
William Barnett
and Van Nguyen.
Policy Publications
Macroeconomic Policy Revival in Mining and Environmental Federalism: Glimpses from Modi Budget 2015–16
with Lekha Chakraborty.
Yojana, 2015.
Economic Policy for Revival of Mining
with Lekha Chakraborty.
Yojana, 2015.