Yu-Ting Chiang

I am an economist at the Federal Reserve Bank of St. Louis. I received my PhD from the Department of Economics and Booth School of Business at the University of Chicago in 2021.

My research studies how information frictions affect macroeconomic dynamics and policies. I am also interested in the distributional consequences of fiscal and monetary policy.

You can contact me at yu-ting.chiang@stls.frb.org

Working papers

Abstract: This paper studies a dispersed information economy in which agents can exert costly attention to learn about an unknown aggregate state of the economy. Under certain conditions, attention and four measures of uncertainty are countercyclical: Agents pay more attention when they expect the economy to be in a bad state, and their reaction generates higher (i) aggregate output volatility, (ii) cross-sectional output dispersion, (iii) forecast dispersion about aggregate output, and (iv) subjective uncertainty about aggregate output faced by each agent. All these phenomena are prominent features of the data. When attention cost is calibrated to U.S. forecast survey data, the model generates countercyclical fluctuations in attention and uncertainty, consistent with un- targeted moments from the data. A new method is developed to solve higher-order dynamics of the equilibrium under an infinite regress problem. This method is neces- sary to capture fluctuations in attention and uncertainty under dispersed information.

Asset supply and liquidity transformation in HANK (with Piotr Zoch)

(draft coming soon)

Abstract: We study a two-asset heterogeneous agent New Keynesian (HANK) model with a frictional financial sector that transforms claims on illiquid capital into liquid assets. The dynamic response of output to a change in fiscal policy depends on the interaction between (1) intertemporal marginal propensities to consume and (2) elasticities of bank liquidity transformation to interest rates. Empirically, the scale of the private supply of liquid assets is large in the U.S., and we show that accounting for its endogenous response is crucial for understanding the effects of fiscal policy. Fiscal transfer stimulates consumption, but the associated increase in government liabilities competes against the private supply of liquid assets and crowds out capital investment. When the household and financial sector balance sheet is calibrated to match the U.S. data, the effect of fiscal stimulus on aggregate output is 50% lower than in a standard two-asset HANK model without endogenous liquid asset supply.

Nominal Maturity Mismatch and the Redistributive Effects of Inflation (with Ezra Karger)

(draft coming soon)

Abstract: We use data on household balance sheets and inflation expectations to document the redistributive effect of unexpected increases in inflation. On net, rich households are net nominal lenders and poor households are net nominal borrowers. So, unexpected inflation act as a progressive tax, transferring wealth from the rich to the poor. However, there is a maturity mismatch in households' nominal positions: nominal assets have shorter average maturity than nominal liabilities, and this mismatch is larger for poorer households. As a result, when inflation unexpectedly increases, poor households experience immediate declines in their ability to pay for goods and services, even as their life-time wealth increases. We study the welfare implications of nominal maturity mismatch in a heterogeneous agent model and show that unexpected inflation shocks can decrease welfare for households who are liquidity constrained, even as net wealth for these households rises.