Falling Natural Rates, Rising Housing Price Volatility and the Optimal Inflation Target, with Oliver Pfaeuti and Timo Reinelt, January 2021

Shows how lower natural rates of interest trigger increased housing price volatility and increased volatility of the natural rate. In the presence of a lower bound constraint, this complicates the stabilization problem of monetary policy and justifies targeting higher inflation rates.


Estimating the Optimal Inflation Target from Trends in Relative Prices, (revise & resubmit American Economic Journal: Macroeconomics) with Henning Weber, January 2020

Using official UK micro price data, the paper shows that relative product prices tend to fall over the life cycle of the product. It shows that this empirical observation has important normative implications for the optimal inflation target, which is estimated to range between 2.6% and 3.2% for the UK economy



Robustly Optimal Monetary Policy in a New Keynesian Model with Housing, (revise & resubmit Journal of Economic Theory) with Michael Woodford, January 2020, NBER working paper 26833

Shows under what circumstances  monetary policies that 'lean-against' unexpected house price increases  are optimal within a New Keynesian  sticky price model with a housing  sector. Press coverage: MarketWatch, Brookings- Hutchins Roundup


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.