Martin Eichenbaum
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View article: Substitution Bias and Fixed-Weight Price Indices in Time-Dependent Pricing Models
Substitution Bias and Fixed-Weight Price Indices in Time-Dependent Pricing Models Open
This paper compares inflation in true price indices to inflation in fixed-weight price indices. We construct model-based inflation measures in time-dependent pricing models that are analogous to measures of inflation in the data, e.g., the…
View article: Measured Inflation and the New-Keynesian Model
Measured Inflation and the New-Keynesian Model Open
Researchers typically compare inflation in the new Keynesian (NK) model to published inflation measures constructed from indices like the CPI. Inflation in the standard NK model without price indexation is bounded above. The model analogue…
View article: On the limits of rational expectations for policy analysis
On the limits of rational expectations for policy analysis Open
In this lecture, I review work addressing three questions. First, are predictions about macro stabilization policies robust to reasonable departures from rational expectations? Second, do people's expectations converge to a particular set …
View article: Replication files for: "Expectations, Infections, and Economic Activity"
Replication files for: "Expectations, Infections, and Economic Activity" Open
This is the replication package for "Expectations, Infections, and Economic Activity," accepted in 2023 by the Journal of Political Economy.
View article: The macroeconomics of testing and quarantining
The macroeconomics of testing and quarantining Open
We develop a SIR-based macroeconomic model to study the impact of testing/ quarantining and social distancing/mask use on health and economic outcomes. These policies can dramatically reduce the costs of an epidemic. Absent testing/quarant…
View article: State-Dependent Effects of Monetary Policy: The Refinancing Channel
State-Dependent Effects of Monetary Policy: The Refinancing Channel Open
This paper studies how the impact of monetary policy depends on the distribution of savings from refinancing mortgages. We show that the efficacy of monetary policy is state dependent, varying in a systematic way with the pool of potential…
View article: Epidemics in the New Keynesian model
Epidemics in the New Keynesian model Open
This paper documents the behavior of key macro aggregates in the wake of the Covid epidemic. We show that a unique feature of the Covid recession is that the peak-to-trough decline is roughly the same for consumption, investment, and outpu…
View article: Fiscal Stimulus with Imperfect Expectations: Spending vs. Tax Policy
Fiscal Stimulus with Imperfect Expectations: Spending vs. Tax Policy Open
This paper addresses the question: how sensitive is the power of fiscal policy at the ZLB to the assumption of rational expectations?We do so through the lens of a standard NK model in which people are dynamic-level-k thinkers.Our analysis…
View article: The Macroeconomics of Epidemics
The Macroeconomics of Epidemics Open
We extend the canonical epidemiology model to study the interaction between economic decisions and epidemics. Our model implies that people cut back on consumption and work to reduce the chances of being infected. These decisions reduce th…
View article: MATLAB replication files for 'The Macroeconomics of Epidemics'
MATLAB replication files for 'The Macroeconomics of Epidemics' Open
The .zip file contains the MATLAB replication codes for Eichenbaum, Rebelo and Trabandt (2021), 'The Macroeconomics of Epidemics', Review of Financial Studies, forthcoming. Please open and read the file readme.txt inside the .zip folder fo…
View article: Expectations, Infections, and Economic Activity
Expectations, Infections, and Economic Activity Open
The Covid epidemic had a large impact on economic activity.In contrast, the dramatic decline in mortality from infectious diseases over the past 120 years had a small economic impact.We argue that people's response to successive Covid wave…
View article: Epidemics in the New Keynesian Model
Epidemics in the New Keynesian Model Open
This paper documents the behavior of key macro aggregates in the wake of the Covid epidemic.We show that a unique feature of the Covid recession is that the peak-to-trough decline is roughly the same for consumption, investment, and output…
View article: The Macroeconomics of Testing and Quarantining
The Macroeconomics of Testing and Quarantining Open
We develop a SIR-based macroeconomic model to study the impact of testing/quarantining and social distancing/mask use on health and economic outcomes.These policies can dramatically reduce the costs of an epidemic.Absent testing/quarantini…
View article: The Macroeconomics of Epidemics
The Macroeconomics of Epidemics Open
We extend the canonical epidemiology model to study the interaction between economic decisions and epidemics.Our model implies that people cut back on consumption and work to reduce the chances of being infected.These decisions reduce the …
View article: How do People Respond to Small Probability Events with Large, Negative Consequences?
How do People Respond to Small Probability Events with Large, Negative Consequences? Open
We study how people react to small probability events with large negative consequences using the outbreak of the COVID-19 epidemic as a natural experiment. Our analysis is based on a unique administrative data set with anonymized monthly e…
View article: Why is Unemployment so Countercyclical
Why is Unemployment so Countercyclical Open
We argue that wage inertia plays a pivotal role in allowing empirically plausible variants of the standard search and matching model to account for the large countercyclical response of unemployment to shocks.
View article: On DSGE Models
On DSGE Models Open
The outcome of any important macroeconomic policy change is the net effect of forces operating on different parts of the economy. A central challenge facing policymakers is how to assess the relative strength of those forces. Economists ha…
View article: On DSGE Models
On DSGE Models Open
The outcome of any important macroeconomic policy change is the net effect of forces operating on different parts of the economy.A central challenge facing policy makers is how to assess the relative strength of those forces.Dynamic Stocha…
View article: On DSGE Models
On DSGE Models Open
The outcome of any important macroeconomic policy change is the net effect of forces operating on different parts of the economy. A central challenge facing policy makers is how to assess the relative strength of those forces. Dynamic Stoc…
View article: Does the New Keynesian Model Have a Uniqueness Problem?
Does the New Keynesian Model Have a Uniqueness Problem? Open
This paper addresses whether non-uniqueness of equilibrium is a substantive problem for the analysis of fiscal policy in New-Keynesian (NK) models at the zero lower bound (ZLB).There would be a substantive problem if there were no compelli…
View article: Does the New Keynesian Model Have a Uniqueness Problem
Does the New Keynesian Model Have a Uniqueness Problem Open
This paper addresses whether non-uniqueness of equilibrium is a substantive problem for the analysis of fiscal policy in New-Keynesian (NK) models at the zero lower bound (ZLB). There would be a substantive problem if there were no compell…