Research

Fields of Interest:

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

Working Papers on the Economics of AI:

Artificial 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 development

Steering 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 Exchange

Economic Growth under Transformative AI [PDF], with Phil Trammell, Sept. 2020

Provides a guide to the vast range of possibilities for output growth, wages, and the labor share under scenarios in which AI is truly transformative

AI and the (Non-Existent?) Future of Work [PDF], with Megan Juelfs, commissioned by the Oxford Handbook of AI Governance, Mar. 2020

If transformative technological progress makes human labor redundant, what are the economic and social implications and how can policy respond?

Aligned with Whom? [PDF], with Avital Balwit, commissioned by the Oxford Handbook of AI Governance, Mar. 2020

Lays out the different ways in which AI can fail society and what we can do about it

The 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 stagnation

Artificial 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 policy

Digitization 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 superstars

Handbook:

Editor, Oxford Handbook of AI Governance, with Justin Bullock et al., under contract, Oxford University Press, Oct. 2020

Working Papers on Macroeconomics and International Finance:

Macroprudential 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 regulation

COVID-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 infection

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], revision requested by Review of Economic Studies, 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

Financial 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 nets

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], Apr. 2007, updated 2011

Emerging market borrowers take on too much dollar debt because they don't internalize the contribution to financial fragility

Publications:

AI 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 workers

COVID-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 workers

Capital 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 literature

Technological 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 inequality

Integrating 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 large

Macroprudential 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 risk

Taxation 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 zero

External 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 externalities

Managing 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.com

Artificial 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.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 [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 economies

Pecuniary 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 WSJ

Capital 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 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 | 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 [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 [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 Exchange

Hot 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 crises

Foreign 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 effects

Dividend 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

Managing Capital Flows: Theoretical Advances and IMF Policy Frameworks, IEO Background Paper BP/20-02/01 for IEO evaluation of "IMF Advice on Capital Flows," Aug. 2020.

Synthesizes theoretical research on managing capital flows from a policy perspectives and evaluates to what extent the IMF's policy frameworks align with it

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.