My research focuses on macroeconomic policy and credit markets. My work combines theoretical frameworks with empirical analysis to better understand the interplay between credit supply and demand and the macroeconomy.
Publications
Banking Heterogeneity, Credit Supply and Economic Growth
International Review of Economics and Finance, 2026
Abstract
This paper demonstrates the significance of heterogeneity in bank equity size as a key dimension for quantifying the effects of local credit supply on local economic outcomes. Using newly compiled datasets from over 5000 bank balance sheets, and mortgage and business loans in the United States, we offer novel empirical evidence on the role of bank equity size heterogeneity in how local bank lending impacts local economic activity. Our results show that accounting for the features of the lender, in particular, bank equity size heterogeneity, significantly amplifies the estimated economic effects of credit supply. The impact of mortgage lending on GDP growth can be up to 60 times larger compared to models that ignore lender heterogeneity, while the effect of business lending can be up to 18 times greater when bank equity size heterogeneity is taken into account. This difference in the size of the impact between business and mortgage lending may arise because credit allocation in the business lending channel is more influenced by risk-return trade-offs than by bank equity size.
In practice: It is not just how much banks lend that drives local growth — it matters which banks are lending. Standard models that ignore lender size can understate the economic impact of credit by an order of magnitude. This matters for anyone assessing regional credit conditions, bank consolidation, or the local consequences of lending pullbacks.
Does household debt affect the transmission mechanism of monetary policy?
Macroeconomic Dynamics, 2026
Abstract
We investigate the effects of household debt on a monetary policy easing shock using a smooth transition vector autoregression model. Using generalized impulse response functions, we measure whether the effect of a reduction in interest rate on output is conditioned by different levels of household debt. We focus on Australia, Sweden and Norway, three developed economies with high levels of household indebtedness, and in the world’s seven largest economies. Our findings show that the short-term effects of a negative monetary policy shock are generally stronger during periods of high household debt. On average, the monetary stimulus (on impact) is 0.06% (percent of GDP) larger in Norway and the United States during periods of high household debt. Our findings also suggest high levels of household debt may diminish the persistence of monetary policy shocks in the medium term ( 4 - 8 quarters).In practice: In economies where households carry a lot of debt — the UK, Australia, the Nordics — a rate cut delivers a bigger initial boost to output, but the effect fades faster. Forecasts of how rate moves feed through to spending should account for the household balance sheet, not just the size of the rate change.
Does household debt affect the size of the fiscal multiplier?
Macroeconomic Dynamics, 2024
Abstract
Does household debt affect the size of the fiscal multiplier? We investigate the effects of household debt on government spending multipliers using a smooth transition vector autoregression model. Through generalized impulse response functions, we measure whether the effect of government spending on GDP is conditioned by different levels of household debt in Australia, Sweden, and Norway, three countries with high levels of household indebtedness, and in the world’s seven largest economies. Our results indicate that the short-term effects of government spending tend to be higher if fiscal expansion takes place during periods of low household debt. On average, the fiscal multiplier (on impact) is 0.70, 0.61, and 0.79 (percent of GDP) larger when the increase in government spending takes place during periods of low household debt for Australia, Norway, and the United States.
In practice: Fiscal stimulus buys less GDP per pound when households are already heavily leveraged — indebted households save rather than spend the extra income. The timing of stimulus relative to the household debt cycle is a first-order consideration for its effectiveness.
Working Papers
Who Bears the Burden of Bank Capital Regulation? Buffers, Risk Weights, and the Supply of Credit
Job Market Paper · July 2026
Abstract
Who bears the burden of bank capital regulation? Using narratively identified capital-requirement shocks and a quarterly panel of U.S. banks (1994–2019), we document two cross-sectional facts: within banks, commercial lending contracts more than real estate lending, reflecting differential risk weights; across banks, institutions with thin voluntary buffers cut lending most. A heterogeneous macro-banking model with precautionary buffers, solved globally and estimated on within-bank impulse responses, rationalises both facts. A one-percentage-point tightening costs 2.4–2.9 percent of credit-market surplus. Risk weights and size tiers redistribute this burden but barely change its aggregate magnitude — a gross transition cost excluding the stability benefits of capital.In practice: When regulators raise bank capital requirements, business lending — carrying the higher risk weight — contracts about forty percent more than mortgage lending, while consumer credit barely responds. Banks with the thinnest capital buffers absorb the largest share of the contraction. The welfare cost is 2.4–2.9% of credit-market surplus per percentage point of tightening, and the voluntary buffers that insulated most banks historically are a finite resource — large enough shocks trigger sharply non-linear credit contractions.
The Bank Profit Channel of Monetary Policy with Jiening Le
Submitted 2026
Abstract
How does bank-level heterogeneity in balance-sheet flexibility shape the transmission of monetary policy to bank profitability? Using high-frequency monetary policy surprises and U.S. Call Report data, we identify a pronounced heterogeneity: contractionary shocks compress net interest income significantly more for medium-sized and small banks than for large, market-funded institutions. This result is consistent with a liability-substitution channel: as policy rates rise, a shift from zero-cost deposits to interest-bearing accounts forces banks to replace cheap funding with expensive alternatives faster than assets reprice. We find this effect is non-linear: a one-standard-deviation increase in expense-channel exposure reduces net interest income by 9% for small banks and 11% for large banks, peaking at 19% for medium-sized banks. Local projection estimates show these profitability effects persist over several quarters. Our results demonstrate that the strength and distribution of funding frictions across the banking sector are key determinants of the macro-financial transmission mechanism.In practice: When central banks raise rates, mid-sized banks lose the most — up to 19% of net interest income — because they must replace cheap deposits with expensive funding faster than their loans reprice, and the hit persists for several quarters. Directly relevant for stress-testing bank earnings and anticipating where credit tightens first in a hiking cycle.
Labour Productivity Growth and the Fiscal Sustainability Programme in the United Kingdom
First Draft August 2025
Abstract
This paper investigates whether higher labour productivity can support long-term fiscal consolidations in the United Kingdom. Using a dynamic stochastic general equilibrium (DSGE) framework, we study how productivity-driven growth interacts with fiscal policy choices. The results show that maintaining government spending per worker without increasing the debt-to-output ratio requires higher taxation to satisfy the intertemporal budget constraint. Capital income tax increases, while effective in restoring fiscal balance, hinder capital accumulation and long-term growth. Consumption tax hikes generate substantial short-term volatility in the spending-to-output ratio, whereas labour tax increases create fewer distortions, as households adjust labour supply. This paper shows that productivity gains cannot replace fiscal discipline. Sustainable growth and stable debt depend on the careful design of tax policy.In practice: For the UK fiscal debate: productivity growth alone will not stabilise the public finances — the tax mix does the heavy lifting. Capital taxes repair the budget but damage long-run growth; consumption taxes create volatility; labour taxes are the least distortive of the three.
Household Debt and Low Labour Productivity: Implications for Labour Supply
Last Draft February 2025
Abstract
This paper investigates the labour supply response of households under high debt burdens in the context of declining labour productivity. Using microdata from the Australian economy, we show that middle-aged individuals whose annual mortgage repayments exceed 20% of household income significantly increase their labour supply in response to rising repayment obligations. Furthermore, employing an incomplete market model, we analyze the transition between steady states under productivity shocks, revealing that higher debt amplifies household reliance on labour income, potentially reducing economic resilience. Our findings provide critical insights into the interplay between household finance and labour supply decisions, particularly in highly indebted economies with stagnant productivity growth, contributing to ongoing debates in labour economics and macroeconomic stability.In practice: Households under mortgage pressure — repayments above 20% of income — respond by working more, not cutting back elsewhere. High household debt therefore makes labour supply more sensitive to repayment shocks, and leaves indebted economies with less slack to absorb downturns.