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 how financial frictions affect monetary and fiscal policy in a heterogeneous agent New Keynesian (HANK) model. We show that, for a large class of financial friction models, the financial sector affects aggregate responses only through its ability to perform liquidity transformation (i.e., issue liquid assets to finance illiquid capital). This ability is summarized by a few parameters that govern the liquid asset supply curve. When the liquid asset supply responds elastically to liquid returns and returns on capital, segmentation between markets is reduced. As a result, (1) the real economy responds strongly to monetary policy, and (2) fiscal policy generates large changes in the liquid asset market and requires a strong response from the monetary authority. The scale of liquid assets supplied by the financial sector is large in the U.S. economy. We show quantitatively that accounting for its endogenous response is crucial for the effects of fiscal and monetary policy.

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.