The Misallocation Costs of Inflation: A Sufficient Statistics Approach, with Andrey Alexandrov and Henning Weber, March 2026.
We determine the sufficient statistics determining the misallocation costs associated with inflation and show how these can be recovered from micro price data. The approach works for a broad class of pricing frictions and in the presence of product level heterogeneity in pricing frictions and flexible prices. We find that misallocation losses are large: an inflation rate that is 8% above its optimal value generates an aggregate productivity loss of about 1%. We show that standard calibration targets used to bring sticky price models to the data can be uninformative about the sufficients statistics characterizing the misallocation loss.


Monetary Policy and Supply-Side Turnover, with Henning Weber, September 2025
Invited Lecture Econometric Society World Congress 2025, Seoul

Provides a linear-quadratic approximation to a heterogeneous firm New Keynesian and shows how the welfare objective, the Phillips curve and optimal monetary policy are affected by heterogeneity. Shows that it become optimal for monetary policy to look through many supply disturbances and to keep nominal rates constant. Following some of these disturbances, output and inflation move in the same direction, causing supply disturbances to look like demand disturbances in the aggregate.


Inflation Distorts Relative Prices: Theory and Evidence
with Andrey Alexandrov and Henning Weber, updated version: May 2024

Using a novel identification approach derived from sticky price theories with time or state-dependent adjustment frictions, we empirically identify the effect of inflation on relative price distortions. The approach can be directly applied to micro price data, does not rely on estimating the gap between actual and flexible prices, and only assumes stationarity of unobserved shocks.
 

Markups and Marginal Costs over the Firm Life, with Tobias Renkin and Gabriel Zuellig, substantially revised version, June 2025
 
We estimate the dynamics of relative markups, marginal costs and prices over the firm
life cycle using detailed firm data from Denmark. Relative marginal costs fall strongly
over the first 15 years of firm life, but relative prices fall only weakly due to a strong
rise in relative markups. Relative price trends thus underestimate trends in relative
productivity. This distorts recent estimates of the optimal inflation target downward
by 0.2-1.2% per year. We show that relative markups increase following the introduc-
tion of new products and the discontinuation of old products.  

Stock Prices Cycles and Business Cycles, with Sebastian Merkel, June 2019

We present a simple RBC model that jointly replicates the behavior of stock prices and business cycles. The model predicts that low interest rates make stock price boom-bust cycles more likely and that these cycles are triggered by a sequence of positive productivity surprises.