Research

Fields of Interest:

Macroeconomics of Artificial Intelligence, Imperfect Capital Markets, International Finance, Public Finance, Inequality 
Working Papers:

Integrating Ethical Values and Economic Value to Steer Progress in Artificial Intelligence [PDF], prepared for Dubber, Markus, Frank Pasquale and Sunit Das (eds.), Oxford Handbook of Ethics of Artificial Intelligence, Oxford University Press, July 2019
Complementing market incentives with ethical values is crucial to steer progress in AI in a direction that is beneficial for humanity at large

Going with the Flows: New Borrowing, Debt Service, and the Transmission of Credit Booms [PDF], with Mathias Drehmann and Mikael Juselius, Apr. 2018
Following the flows of funds between borrowers and lenders explains the non-monotonic real effects of credit booms over time
Currency Wars or Efficient Spillovers? A General Theory of International Policy Cooperation [PDF], Dec. 2018
Provides a benchmark result for when the spillovers from national economic policymaking are globally efficient
Risk-Taking Dynamics and Financial Stability [PDF], with Martin Nowak, Dec. 2016
The dynamics of risk-taking in the financial sector are driven by compositional effects, leading to novel effects of financial policy
Capital Controls and Currency Wars [PDF], Feb. 2013
Studies spillover effects of capital account interventions and implications for policy coordination - cited in the Economist's Free Exchange

Insurance Properties of Local and Foreign Currency Bonds in Small Open Economies [PDF], July 2009
Local currency and dollar bonds achieve full insurance in standard small open economy models
Excessive Dollar Borrowing in Emerging Markets: Balance Sheet Effects and Macroeconomic Externalities [PDF], April 2007, updated 2011
Emerging market borrowers take on too much dollar debt because they don't internalize the contribution to financial fragility

Financial Innovation for Rent Extraction [PDF]
Work in Progress:  [contact me for preliminary versions]

Artificial Intelligence, Worker-Replacing Technological Progress, and Income Distribution (with Joseph Stiglitz)
Worker-replacing technological progress will super-charge economic growth and inequality; we discuss implications for public policy

The Rise of Artificially Intelligent Agents [PDF | Slides]
           Analyzes an economic future in which humans and machines interact symmetrically and shows the possibility of machine singularity coexisting with human stagnation

Digital technologies intrinsically lead to higher markups and a lower labor share, favoring the creation of superstars

Publications: 

Macroprudential Regulation Versus Mopping Up After the Crash [PDF | NBER WP], with Olivier Jeanne, accepted, Review of Economic Studies, August 2019.
It is optimal for policymakers to use a mix of ex-ante prudential measures and ex-post stimulus measures in response to financial crises risk

Capital Controls: Theory and Evidence [PDF], with Bilge Erten and José Antonio Ocampo, accepted, Journal of Economic Literature, September 2019.
Surveys the literature on capital controls using a teachable model and an in-depth review of the empirical literature

Taxation and the Vanishing Labor Market in the Age of AI [PDF], accepted, Ohio State Technology Law Journal, August 2019
Discusses how to raise tax revenue when AI displaces labor and observes that the optimal tax rate on labor will go to zero

External societal costs of antimicrobial resistance in humans attributable to antimicrobial use in livestock [PDF | Worksheet | Technical note], with Chris Heaney et al., accepted by Annual Review of Public Health, August 2019
Evaluates how antibiotic use in animal agriculture contributes to antibiotic resistance in human pathogens and quantifies the resulting externalities

Artificial Intelligence and Its Implications for Income Distribution and Unemployment [Publication | WP | Presentation], with Joseph Stiglitz, in Agrawal et al.: The Economics of Artificial Intelligence, NBER and University of Chicago Press, May 2019.
           Provides a systematic overview of the implications of "worker-replacing" technological progress for inequality - covered on MarketWatch.com

Managing Credit Booms and Busts: A Pigouvian Taxation Approach [WP | Matlab], with Olivier Jeanne, forthcoming, Journal of Monetary Economics, 2018.
A dynamic model of counter-cyclical macro-prudential regulation for credit markets - cited in Economist's Economics Focus, WSJ.com

Thoughts on DSGE Macroeconomics: Matching the Moment, but Missing the Point? [PDF | Cartoon | Chinese version], in Towards a Just Society: Joseph Stiglitz and 21st Century Economics, festschrift edited by Martin Guzman, Aug 2018.
Macroeconomics would benefit from greater methodological diversity

Regulating Capital Flows to Emerging Markets: An Externality View [PDF | Appendix | Video], Journal of International Economics 111, pp. 61-80, Mar 2018.
Foundations for prudential capital controls to reduce the risk of financial crises in emerging economies

Pecuniary Externalities in Economies with Financial Frictions [Publication | PDF WP | Appendix | Slides], with Eduardo Dávila, Review of Economic Studies 85(1), pp. 352–395, Jan. 2018.
Develops a general methodology to categorize & characterize pecuniary externalities from both imperfect risk-sharing and collateral constraints
Note: this paper subsumes my earlier working paper on "Systemic Risk-Taking: Amplification Effects, Externalities, and Regulatory Responses" [2011 ECB WP | 2012 update] and was previously also circulated under the title "Fire-Sale Externalities."

Liquidity Trap and Excessive Leverage [Publication | PDF WP | Appendix | Blog], with Alp Simsek, American Economic Review 106(3), pp. 699-738, Mar. 2016.
Deleveraging leads to aggregate demand externalities at the ZLB that call for macroprudential regulation - cited in the WSJ

Capital Controls or Macroprudential Regulation? [Publication | PDF WP | IMF WP], with Damiano Sandri, Journal of International Economics 99(S1),  pp. 27-42, Mar. 2016.
Both instruments are needed in emerging economies that are at risk of financial instability because of large capital inflows

Undervaluation through Foreign Reserve Accumulation: Static Losses, Dynamic Gains [Publication | 2010 WB WP | update | VoxEU Op-Ed], with Luis Servén, Journal of International Money and Finance 64, pp. 104-136, Feb. 2016.
Reserve accumulation may trigger positive learning-by-doing externalities in the tradable sector and improve welfare

The Redistributive Effects of Financial Deregulation, [Publication | BIS WP | IMF WP | Slides | Video], with Jonathan Kreamer, Journal of Monetary Economics 68, pp. S55-67, Dec. 2014.
Financial deregulation allows the financial sector to extract larger rents from the rest of society

From Sudden Stops to Fisherian Deflation: Quantitative Theory and Policy [Publication | PDF WP | Data and Matlab codes], with Enrique Mendoza, Annual Review of Economics 6, pp. 299-332, Aug. 2014.
Provides an introduction to quantitative models and the empirics of sudden stops, with ample online resources
Capital Flows, Crises and Externalities [PDF WP | Book], Chapter 5 in Allen, Franklin et al., Proceedings of the 16th IEA World Congress, Volume III, Palgrave Macmillan, Nov. 2012.
A primer that develops a simple formal model of emerging market balance sheet crises, externalities and capital flow regulation

The New Economics of Prudential Capital Controls [PDF WP | Publication | Kindle], IMF Economic Review 59(3), pp. 523-561, August 2011. Also IMF Working Paper 11/298..
An introduction to the emerging new literature on prudential capital controls in emerging economies, cited in the FT's Economists' Forum and the Economist's Free Exchange

Hot Money and Serial Financial Crises [PDF WP | Publication | Slides], IMF Economic Review 59(2), pp. 306-339, June 2011. 
Crises in one area of the world economy cause "hot money" to flow into other areas and create the risk of serial financial crises

Foreign Currency Debt, Risk Premia and Macroeconomic Volatility [PDF WP | Publication], European Economic Review 55, pp. 371-385, April 2011.

Decoupling and Recoupling [PDF WP | Publication], with Agustín Roitman and Carlos Végh, American Economic Review P&P 100(2), pp. 393-397, May 2010. Also NBER Working Paper w15907.

Excessive Volatility in Capital Flows: A Pigouvian Taxation Approach [PDF WP | Publication | Online Appendix], with Olivier Jeanne, American Economic Review P&P 100(2), pp. 403-407, May 2010. Also NBER Working Paper w15927.
Dividend Taxation and Intertemporal Tax Arbitrage [PDF WP | Publication], with Joseph E. Stiglitz, Journal of Public Economics 93(1-2), pp. 142 - 159, Feb. 2009. Also NBER Working Paper w13858. 

An Econometric Method of Correcting for Unit Nonresponse Bias in Surveys [PDF WP | Matlab code | Stata code], with Johan Mistiaen and Martin Ravallion, Journal of Econometrics, 136(1), pp. 213 - 235, Jan. 2007. Also World Bank Policy Research Working Paper No. 3711. 

Survey Nonresponse and the Distribution of Income [PDF WP], with Johan Mistiaen and Martin Ravallion, Journal of Economic Inequality 4(1), pp. 33 - 55, April 2006. Also World Bank Policy Research Working Paper No. 3543.

The Potential Consequences of Alternative Exchange Rate Regimes: A Study of Three Candidate Regions [PDF WP], with Eduard Hochreiter and Pierre L. Siklos, International Journal of Finance & Economics 8(4), pp. 327 - 349, Sept. 2003. Also OeNB Working Paper 76.
Other Publications


AI and Income Distribution on the Planet of Superstars, in Planet Algorithm: AI for a Predictive and Inclusive form of Integration, IDB Integration and Trade Journal 22(44), July 2018.

A Framework for Costing the Lowering of Antimicrobial Use in Food Animal Production, with Anthony D. So, Reshma Ramachandran, David C. Love, Jillian P. Fry and Christopher D. Heaney, Commissioned paper for the UK Review on Antimicrobial Resistance, May 2016.
Macroprudential Policy Beyond Banking Regulation, with Olivier Jeanne, Banque de France Financial Stability Review n°18, pp. 163-172, April 2014.
Multilateral Aspects of Managing the Capital Account, with Jonathan Ostry and Atish R. Ghosh, IMF Staff Discussion Note 12/10, September 2012.  See associated academic paper.

Emerging market economies after the crisis: trapped by global liquidity? in Volz, Ulrich (ed.), Financial Stability in Emerging Markets: Dealing with Global Liquidity, German Development Institute, pp. 35 - 39, April 2012.

Regulating Capital Flows: Design and Implementation Issues [PDF | VoxEU], December 2010.

Managing Credit Booms and Busts [VoxEU], with Olivier Jeanne, November 2010.

Older Papers

Expectations and Exchange Rates [PDF], with Hamid Rashid, July 2006
        Changes in expectations about macro variables from the Economist Poll of Forecasters explain exchange rate movements