Working Papers
Abstract: Members of a monetary union have limited control over monetary policy. This can elevate the role of fiscal policy as the primary macroeconomic tool against country-specific shocks. In this paper,
I argue that fiscal policy is highly effective at stimulating output in countries via its impact on consumer sentiments. Using data for the European Economic and Monetary union, I provide evidence that the sentiments channel
for fiscal policy is strongly present in peripheral European countries but absent in core countries. The impact of fiscal policy on consumer sentiments also make fiscal consolidation more costly in terms of output in peripheral
countries. I validate my empirical findings using a New Keynesian model of currency union where agents form expectations based on non-fundamental factors (animal spirits) correlated with fiscal policy. I show the existence of a
stronger response of output to fiscal policy through the latter's impact on consumer sentiments.
Stock Returns of Federal Reserve Officials.
(with Cody Couture)
Abstract: This paper examines the trading behavior of members of the Federal Reserve's Federal Open Market Committee (FOMC). First, we calculate the financial market returns of FOMC members relative to the overall market
and examine if there is any evidence of abnormal returns. Second, we test whether FOMC members exhibit evidence of market timing around monetary policy announcements. We do not find any evidence that FOMC officials select securities
that earn abnormal returns. However, our results regarding market timing are mixed. Though we do not find any evidence of security selection or portfolio rebalancing with respect to monetary policy decisions, we do find that stock sales
by FOMC officials are typically succeeded by negative returns in the overall stock market.
Unconventional Monetary Policy and Consumption.
Abstract: This paper provides empirical evidence on the role played by home mortgages in transmission of unconventional monetary policy.
Using household level panel data on consumption, I show that the ability of households to refinance their mortgages and extract
home equity, determines the efficacy of monetary policy in stimulating consumption. Homeowners who refinance their loan in
response to an expansionary monetary policy shock consume more than other households. This heterogeneity is conditioned by
local home prices. I find that mortgage owners who refinance their loan in states with higher house prices have higher
consumption growth following an expansionary shock.