Research
Fields of Interest:
The Economics and Governance of Transformative AI, Inequality, Public Finance, Imperfect Capital Markets, International Finance
White Papers on Governance and Economics of AI:
Foundational Challenges in Assuring Alignment and Safety of Large Language Models [Website | PDF | X Thread], with Usman Anwar et al., Apr. 2024
Identifies 18 foundational challenges in assuring the alignment and safety of LLMs, including significant socioeconomic challengesOpen-Sourcing Highly Capable Foundation Models: An Evaluation of Risks, Benefits, and Alternative Methods for Pursuing Open-Source Objectives [PDF], with Elizabeth Seger et al., Oct. 2023
Compares the benefits (economic etc) with the safety risks of open sourcing and proposes alternative mechanisms of obtaining the main benefitsFrontier AI Regulation: Managing Emerging Risks to Public Safety [PDF], with Markus Anderljung et al., July 2023
Proposes a tangible framework for how to regulate the emerging safety risks from the most advanced "frontier" AI systemsWorking Papers on the Economics of AI:
Scenarios for the Transition to AGI [PDF | Slides], with Donghyun Suh, March 2024.
Analyzes what the transition to artificial general intelligence would imply for output and wagesConcentrating Intelligence: Scaling Laws and Market Structure in Generative AI [PDF], with Jai Vipra, Feb. 2023, revised for Economic Policy.
Examines the tendency towards market concentration in foundation models and how to balance competition and safetyFrontier AI Regulation: Managing Emerging Risks to Public Safety [PDF], July 2023
Proposes a tangible framework for how to regulate the emerging safety risks from the most advanced "frontier" AI systemsHow innovation affects labor markets: an impact assessment [PDF], Feb. 2023
Develops a tangible 5-step framework to evaluate the labor market impact of an innovation and uses it to show that chatbots hurt unskilled workersArtificial Intelligence, Globalization, and Strategies for Economic Development [PDF], with Joseph Stiglitz, Jan. 2021
Labor-saving advances in AI may undo the gains from globalization and pose new challenges for economic developmentSteering Technological Progress [PDF | Slides], with Joseph Stiglitz, Oct. 2020
Analyzes how to steer technological progress in directions that complement labor rather than displacing it - cited by The Economist's Free ExchangeEconomic Growth under Transformative AI [PDF], with Phil Trammell, Oct. 2023
Provides a guide to the vast range of possibilities for output growth, wages, and the labor share under scenarios in which AI is truly transformativeThe Rise of Artificially Intelligent Agents [PDF | Slides], Apr. 2019
Analyzes an economic future in which humans and machines interact symmetrically and shows the possibility of machine singularity coexisting with human stagnationArtificial Intelligence, Worker-Replacing Technological Progress, and Income Distribution [PDF | Slides], with Joseph Stiglitz, Jan. 2019
Worker-replacing technological progress may super-charge economic growth and inequality; we discuss implications for public policyDigitization and the Macro-Economics of Superstars [PDF | Video summary], with Ding Xuan Ng, Dec. 2018
Digital technologies intrinsically lead to higher markups and a lower labor share, favoring the creation of superstarsHandbook:
Editor, Oxford Handbook of AI Governance [Website], with Justin Bullock et al., Oxford University Press, April 2024
Working Papers on Macroeconomics and International Finance:
Long-term debt propagation and real reversals [PDF], with Mathias Drehmann and Mikael Juselius, revision requested by Journal of Finance, Nov. 2023
Long-term debt generates a propagation mechanism that explains the non-monotonic real effects of credit booms over timeMacroprudential Taxes, Ratios, and Rents: Equivalences and Not-Quite Equivalences [PDF], with Daniel Harper, Jun 2021
Analyzes how different types of macroprudential measures affect the distribution of the surplus created by regulationCOVID-19 Infection Externalities: Trading Off Lives vs. Livelihoods? [WP | NBER | CEPR | Summary | VoxEU column], with Zach Bethune, Apr. 2020
Public health measures are essential to deal with COVID-19 because rational individuals internalize only $18k of the true $55k social cost of an infectionCurrency Wars or Efficient Spillovers? A General Theory of International Policy Cooperation [PDF]
Provides a benchmark result for when the spillovers from national economic policymaking are globally efficientRisk-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 policyFinancial Innovation for Rent Extraction [PDF], Dec. 2014
Argues that a significant fraction of financial innovations are designed to extract rents from formal or informal safety netsCapital 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 ExchangeInsurance 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 modelsExcessive Dollar Borrowing in Emerging Markets: Balance Sheet Effects and Macroeconomic Externalities [PDF], Apr. 2007, updated 2011
Emerging market borrowers take on too much dollar debt because they don't internalize the contribution to financial fragilityPublications:
Generative AI for Economic Research: Use Cases and Implications for Economists [PDF | Update 2024Q2 | Website | Slides], Journal of Economic Literature 61(4), pp. 1281-1317 (lead article), Dec. 2023. (1st version: Language Models and Cognitive Automation for Economic Research: NBER WP 30957.)
Lays out dozens of use cases for large language models in economics and discusses the implications for the future of economic research [featured on CNN]Scenario Planning for an A(G)I Future [Link | PDF], IMF Finance & Development Magazine 60(4), pp. 30-33, Dec. 2023.
Makes the case that economists and policymakers need to prepare for the possibility of human-level artificial intelligenceAI's Economic Peril to Democracy [PDF | Publication], with Stephanie A. Bell, Journal of Democracy. 34(4), pp. 151-161, Oct. 2023.
Analyzes how AI could erode democracy by amplifying inequality and offers solutionsIntroduction, Oxford Handbook of AI Governance [PDF | Publication], with Justin Bullock et al, Oxford Handbook of AI Governance, pp. 1-18, Apr. 2024.
Explores the evolution of our governance eco-system, how we can integrate AI into it, and how AI will transform itAligned with Whom? Direct and Social Goals for AI Systems [PDF | Publication], with Avital Balwit, Oxford Handbook of AI Governance, pp. 65-85, Apr. 2024.
Distinguishes between the direct and social alignment problem and examines the role of AI governance to address social alignmentPreparing for the (Non-Existent?) Future of Work [PDF | Publication], with Megan Juelfs, Oxford Handbook of AI Governance, pp. 746-776, Apr. 2024.
If transformative AI makes human labor redundant, what are the economic and social implications, and how can we prepare for it?Managing Capital Flows: Theoretical Advances and IMF Policy Frameworks [Publication | IEO BP], Journal of Globalization and Development, 13(1), pp. 91-122, May 2022.
Evaluates to what extent the IMF's policy frameworks align with theoretical research on managing capital flowsAI and Shared Prosperity [Publication | WP], with Katya Klinova, Proceedings of the 2021 AAAI/ACM Conference on AI, Ethics, and Society (AIES ’21), pp. 645-651, July 2021.
Develops a framework for AI developers to take into account the impact of their inventions on workersCOVID-19 Driven Advances in Automation and AI Risk Exacerbating Economic Inequality [Publication | PDF], with Joseph Stiglitz, BMJ 372:n367, Mar. 2021.
As the COVID-19 pandemic has accelerated automation, we need to renew efforts to steer advances in automation and AI to preserve a gainful role for human workersCapital Controls: Theory and Evidence [Publication | WP], with Bilge Erten and José Antonio Ocampo, Journal of Economic Literature 59(1), pp. 45-89, Mar. 2021.
Surveys the literature on capital controls using a teachable model and an in-depth review of the empirical literatureTechnological Progress, Artificial Intelligence, and Inclusive Growth [Publication | IMF WP], with Joseph Stiglitz, in Valerie Cerra et al. (eds.), How to Achieve Inclusive Growth, IMF and Oxford University Press, 2021.
Lays out how to pursue inclusive growth when AI and other forms of emerging technologies threaten to reduce labor demand and increase inequalityIntegrating Ethical Values and Economic Value to Steer Progress in Artificial Intelligence [Publication | WP], in Markus Dubber, Frank Pasquale and Sunit Das (eds.), Oxford Handbook of Ethics of Artificial Intelligence, pp. 463-479, Oxford University Press, July 2020.
Complementing market incentives with ethical values is crucial to steer progress in AI in a direction that is beneficial for humanity at largeMacroprudential Regulation Versus Mopping Up After the Crash [Publication | WP | NBER WP], with Olivier Jeanne, Review of Economic Studies 87(3), pp. 1470-1497, May 2020.
It is optimal for policymakers to use a mix of ex-ante prudential measures and ex-post stimulus measures in response to financial crises riskTaxation and the Vanishing Labor Market in the Age of AI [Publication | WP], Ohio State Technology Law Journal 16(1), pp. 244-257, Apr. 2020.
Discusses how to raise tax revenue when AI displaces labor and observes that the optimal tax rate on labor will go to zeroExternal societal costs of antimicrobial resistance in humans attributable to antimicrobial use in livestock [Publication | WP | Worksheet | Technical note], with Gabriel Innes et al., Annual Review of Public Health 41, pp. 141-157, Apr. 2020.
Evaluates how antibiotic use in animal agriculture contributes to antibiotic resistance in human pathogens and quantifies the resulting externalitiesManaging Credit Booms and Busts: A Pigouvian Taxation Approach [Publication | 2010 NBER WP | Appendix | Matlab], with Olivier Jeanne, Journal of Monetary Economics 107, pp. 2-17, Nov. 2019.
A dynamic model of counter-cyclical macro-prudential regulation for credit markets - cited in Economist's Economics Focus, WSJ.comArtificial Intelligence and Its Implications for Income Distribution and Unemployment [Publication | WP | Presentation], with Joseph Stiglitz, in Ajay Agrawal, Joshua Gans and Avi Goldfarb (eds.), The Economics of Artificial Intelligence, pp. 349-390, NBER and University of Chicago Press, May 2019.
Provides a systematic overview of the implications of "worker-replacing" technological progress for inequality - covered in New York Times, MarketWatch.comThoughts 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 diversityRegulating Capital Flows to Emerging Markets: An Externality View [Publication | WP | Appendix], Journal of International Economics 111, pp. 61-80, Mar. 2018.
Foundations for prudential capital controls to reduce the risk of financial crises in emerging economiesPecuniary Externalities in Economies with Financial Frictions [Publication | 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 constraintsNote: 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 | 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 WSJCapital Controls or Macroprudential Regulation? [Publication | 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 inflowsUndervaluation 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 welfareThe 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 societyFrom Sudden Stops to Fisherian Deflation: Quantitative Theory and Policy [Publication | 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 resourcesCapital Flows, Crises and Externalities [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 regulationThe New Economics of Prudential Capital Controls [Publication | WP | Kindle], IMF Economic Review 59(3), pp. 523-561, Aug. 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 ExchangeHot Money and Serial Financial Crises [Publication | WP | 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 crisesForeign Currency Debt, Risk Premia and Macroeconomic Volatility [Publication | WP], European Economic Review 55, pp. 371-385, Apr. 2011.
Decoupling and Recoupling [Publication | WP], with Agustín Roitman and Carlos Végh, American Economic Review P&P 100(2), pp. 393-397, May 2010.
Excessive Volatility in Capital Flows: A Pigouvian Taxation Approach [Publication | WP | Online Appendix], with Olivier Jeanne, American Economic Review P&P 100(2), pp. 403-407, May 2010.
Provides a simple three-period model of financial amplification and pecuniary externalities based on asset price feedback effectsDividend Taxation and Intertemporal Tax Arbitrage [Publication | WP], 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 [Publication | 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 [Publication | PDF], with Johan Mistiaen and Martin Ravallion, Journal of Economic Inequality 4(1), pp. 33 - 55, Apr. 2006. Also World Bank Policy Research Working Paper No. 3543.
Other Publications
Labor in the Age of Automation and AI, policy brief, Economists for Inclusive Prosperity, Jan. 2019.
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, Apr. 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, Apr. 2012.
Regulating Capital Flows: Design and Implementation Issues [PDF | VoxEU], Dec. 2010.
Managing Credit Booms and Busts [VoxEU], with Olivier Jeanne, Nov. 2010.
The Potential Consequences of Alternative Exchange Rate Regimes: A Study of Three Candidate Regions [Publication | OeNB WP #76], with Eduard Hochreiter and Pierre L. Siklos, International Journal of Finance & Economics 8(4), pp. 327 - 349, Sept. 2003.