1. “Recessions and Recoveries. Multinational Banks in the Business Cycle” (forthcoming),
    with Qingqing Cao, Raoul Minetti, Maria Pia Olivero Journal of Monetary Economics
    How does the expansion of multinational banks influence the business cycle of host countries? We study an economy where multinational banks can transfer liquidity across borders through internal capital markets but are hindered in their allocation of liquidity by limited knowledge of local firms’ assets. We find that, following domestic banking shocks, multinational banks moderate the depth of the contraction but slow down the recovery. A calibration to Polish data suggests that multinational banks reduce the average depth of recessions by about 5% but increase their duration by 10%. The predictions are broadly consistent with evidence from a large panel of countries.

Working Papers

  1. “Intermediation Costs and Banking Hubs in the Global Network” [PDF] job market paper,
    with Raoul Minetti, Oren Ziv
    We present a model that can capture the effects of banking networks and the potential for spillovers from the concentration of claims at financial hubs. In particular, we gauge the implications from indirect international flows and the role of financial hubs with respect to intermediation costs. Using the variation from direct and indirect banking flows provided by the Consolidated and Locational banking statistics from the Bank of International Settlements, we use the model to recover the bilateral and expected edge-specific costs through minimal distance estimation, thus providing a theoretical estimation of the unobserved cost usually proxied by a combination of observable distance measures. A network model defines the extensive margin. Then, we embed the Allen and Arkolakis (2019) transportation model in a Eaton and Kortum (2002) setting to allow for endogenous financial hub formation and incorporate the choice of path. The intensive margin of lending flows arises from banks choosing the path within a network through which they allocate their corporate lending, while decentralized bilateral shocks determine the interbank network equilibrium.

Work in Progress

  1. High Dimensional Environmental Uncertainty and Monetary Policy, with Vincenzo Giannico
  2. Fiscal-Monetary Interaction and Inequality, with Timothy Moreland
  3. International Spillovers of Monetary Policy