Research

Working papers

  • Household processing effort over the business cycle: time and price implications (First version: September 2023) - Planned revisions pending data access renewal

    Using scanner data and product-level information, this paper documents the trend and the cyclicality of the processing level of market-purchased household food consumption over the period 2007 to 2020 in the United States. I identify a novel strategy, the processing effort, that households exploit to reduce the price of their basket. This strategy consists in altering their basket composition at business cycle frequencies to purchase less processed foods for which I uncover a lower price per unit. Several results emerge. First, the strategy is effective in reducing the price per unit of the household basket. Second, the strategy was used by households in both the Great and the Covid-19 recessions but varied in intensity across income groups consistently with the theory of the opportunity cost of time. Third, its nature allows to infer that home production is countercyclical which has implications for modelling the time allocation of households during economic downturns. Finally, I develop a tractable heterogeneous agent model (THANK) that reproduces the empirical evidence and reveals broader implications of the processing effort strategy including an amplification of the inflation reduction capacity of a monetary policy tightening.

  • News-driven household macroeconomic expectations: regional vs. national telecast information (Last version: April 2024 , First version: June 2021) - R&R at Journal of Money, Credit and Banking (2nd)

    This paper explores the link between news and household macroeconomic expectations. I investigate which news topics are linked to one-year ahead household unemployment, inflation, and economic situation expectations. I show that household expectations incorporate news information from a set of news topics reflecting the state of the economy, as well as from expectation-specific topics. I uncover that energy news, and especially oil news, matter specifically for inflation expectations. Furthermore, I document the geographical dispersion of regional news topic coverage and consider their separate effects on household expectations. I find evidence that households incorporate both regional and national news in their expectations, with news on local labor market conditions having a prominent role.

  • Inflation (in)attention, media, and central bank trust, with S. ter Ellen (First version: September 2023) - Revisions in progress

    While public trust may be a necessary condition for fulfilling the ECB's primary mandate of price stability, not delivering on that mandate might in turn deteriorate public trust in the ECB. We therefore study how inflation impacts individuals' trust in the ECB. We show that inflation only plays an indirect role in whether households trust the ECB: when inflation is high, respondents are more likely to see it as a top concern for themselves and their country. It is this concern with inflation that decreases their trust in the ECB. We further hypothesize that a higher exposure of individuals to inflation news increases the probability that they pay attention to inflation, and thus report to be concerned about inflation. We find that this is indeed the case – over and above the effect of inflation itself. The thresholds of inflation rates for which the media starts to pay attention to inflation are roughly in line with those needed to reach a 50% probability of being personally concerned about inflation.

Publications

This paper explores the impact of media, public policy and regional income and population density heterogeneity on renewable energy crowdfunding campaigns. I examine the effects of media-coverage and geographical restrictions on the number of participants of successful crowdfunding campaigns and their duration. I find that the higher the media coverage, the larger the number of investors. I uncover that using a combination of social and traditional media attracts more investors than using a single outlet. I show that an unintended energy policy consequence of geographically restricted is that campaigns are longer and involve fewer investors.

Contrary to the Great and other past US Recessions, the reduction in services consumption exceeds the decline in nondurables consumption during the COVID-19 pandemic. We study the drivers of this unprecedented phenomenon through the lens of an estimated multi-sector Dynamic Stochastic General Equilibrium (DSGE) model that distinguishes between nondurables and services sectors. We find that economic uncertainty is once again important, but it does not generate sectoral heterogeneity. Demand-side factors reallocating consumption across sectors and proxying for voluntary and regulatory social distancing measures, as well as the lack of wage adjustments in services despite plummeting employment, became influential during the pandemic.

Work in progress on…

  1. … household consumption choices over the business cycle

  2. … inflation expectations

  3. … household decisions and beliefs

  4. … effects of the news on household and firms