This page contains a brief description of my research activity. If you have questions or comments, feel free to contact me:
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The Financial Accounts of the United States

The Financial Accounts of the United States include data on the flow of funds and levels of financial assets and liabilities, by sector and financial instrument; full balance sheets, including net worth, for households and nonprofit organizations, nonfinancial corporate businesses, and nonfinancial noncorporate businesses; Integrated Macroeconomic Accounts; and additional supplemental detail.
Financial Accounts of the United States - Z.1

The Enhanced Financial Accounts initiative is a long-term effort to augment the Financial Accounts of the United States with a richer and more detailed picture of financial intermediation and interconnections. As part of this initiative, we are providing supplementary information that offers finer detail, additional types of activities, higher-frequency data, and more-disaggregated data, even if such data are not available for all sectors or easily incorporated into the existing structure of the Financial Accounts.

Enhanced Financial Accounts of the United States - Z.1

The integrated macroeconomic accounts of the United States

(with Susan Hume McIntosh, Elizabeth Ball Holmquist, Lisa Lynn, and David Wasshausen)
In Measuring Economic Sustainability and Progress, Jorgenson, Landefeld, and Schreyer, eds., NBER Studies in Income and Wealth, University of Chicago Press, 2014.
Integrated Macroeconomic Accounts of the United States

Entrepreneurship and wealth accumulation

Credit crunches and credit allocation in a model of entrepreneurship

(with Marco Bassetto and Mariacristina De Nardi)
Review of Economic Dynamics, Volume 18, Issue 1, January 2015, p. 5376.

We study the effects of credit shocks in a model with heterogeneous entrepreneurs, financing constraints, and a realistic firm-size distribution. As entrepreneurial firms can grow only slowly and rely heavily on retained earnings to expand the size of their business, we show that, by reducing entrepreneurial firm size and earnings, negative shocks have a very persistent effect on real activity. In determining the speed of recovery from an adverse economic shock, the most important factor is the extent to which the shock erodes entrepreneurial wealth.

Estate taxation, entrepreneurship, and wealth

(with Mariacristina De Nardi)
American Economic Review, vol. 99(1), March 2009, p. 85-111.

This paper studies the estate tax and its abolition in a quantitative framework with business investment, borrowing constraints, estate transmission, and wealth inequality. We find that the estate tax has little effect on the saving and investment decisions of small businesses and farms, but does distort the decisions of larger firms, thereby reducing aggregate output and savings. Removing such distortions by eliminating the estate tax does not imply that everyone would be better off. In the case in which other taxes were raised to re-establish fiscal balance, the people at the top of the wealth distribution would experience a large welfare gain, but this would come at the cost of reduced welfare for most of the population.

Wealth inequality: data and models

(with Mariacristina De Nardi)
Macroeconomic Dynamics vol. 12 (September 2008), Supplement S2, pp. 285-313.

In the United States wealth is highly concentrated and very unequally distributed: the richest 1% hold one third of the total wealth in the economy. Understanding the determinants of wealth inequality is a challenge for many economic models. We summarize some key facts about the wealth distribution and what economic models have been able to explain so far.

Entrepreneurship, frictions, and wealth

(with Mariacristina De Nardi)
Journal of Political Economy 106(5), oct 2006, p 835-870.

This paper constructs and calibrates a parsimonious model of occupational choice that allows for entrepreneurial entry, exit, and investment decisions in presence of borrowing constraints. The model fits very well a number of empirical observations, including the observed wealth distribution for entrepreneurs and workers. At the aggregate level, more restrictive borrowing constraints generate less wealth concentration, and reduce average firm size, aggregate capital, and the fraction of entrepreneurs. Voluntary bequests allow some high-ability workers to establish or enlarge an entrepreneurial activity. With accidental bequests only, there would be fewer very large firms, and less aggregate capital and wealth concentration.

Savings and consumption

Wealth accumulation over the life cycle and precautionary savings.

Journal of Business and Economic Statistics, 21(3), july 2003, p. 339-353.

I construct a structural model of wealth accumulation, and estimate its parameters using simulation methods and wealth data from the PSID and the SCF. I use the results to study the importance of precautionary savings. The estimates imply that households save mostly for precautionary purposes early in life, while saving for retirement purposes is relevant only near retirement. I discuss the implications of these results for various questions: the importance of heterogeneity in the discount factor (patience) in explaining the dispersion of wealth, the elasticity of savings to changes in interest rates, the importance of bequest motives.

Interest Elasticity in a Life Cycle Model with Precautionary Savings

AER, Papers and Proceedings, May 2001, 91(2), p. 418-421.

I compute by how much households would increase their wealth in response to an increase in interest rates (eg. lower taxes) in a life cycle model with precautionary savings.

Robustness and pricing with uncertain growth

with Lars Peter Hansen, Thomas Sargent and Noah Williams
Review of Financial Studies, vol 15, n 2, 2002, pp 363-404.

We study how decision makers' concerns about robustness affect prices and quantities in a stochastic growth model. The mean technological growth rate is unobservable, and investors must solve a signal extraction problem. We show that to promote a decision rule that is robust to model misspecification, an investor acts as if a malevolent player threatens to perturb the data generating process. We show that robustness increases the risk prices, and that movements in the risk-return tradeoff are dominated by movements in the growth state probabilities.