Hoover Institution, Stanford University,
ogiesecke [@] stanford.edu
Corporate bond markets are a growing source of funding for companies throughout the world. How does a firm's debt structure affect the transmission of monetary policy? This paper sheds light on a new corporate finance mechanism in which monetary policy disproportionately impacts market-financed firms as bonds have higher downside risks relative to bank loans. We present high-frequency evidence consistent with this channel in the euro area: firms with more bonds are more affected by surprise monetary actions than their counterparts. This finding stands in contrast to a standard bank lending channel and suggests a key role for bond markets in monetary transmission.
Finalist European Central Bank Young Economist Competition 2021
Presented at: EPR ESSIM 2021, CEPR and Bank of Finland Joint Conference on Monetary Policy Tools and Their Impact on the Macroeconomy, SED 2021, EFA 2020, 9th MoFiR Workshop on Banking, SFS Cavalcade 2020, CFM London Macro Workshop, Bocconi, University of Cambridge, Columbia Business School, LMU Munich, and NYU Stern, Georgetown University.
Presented at: UEA 11th European Meeting, Brookings Institution 2022 Municipal Finance Conference, UEA 16th North America Meeting (scheduled).
The deteriorating fiscal position of municipalities across the United States raises the question which adjustment mechanisms municipalities have at their disposal and what their effects are. We utilize quasi-experimental variation in the year of property tax assessments in the state of Connecticut to provide causal evidence of the fiscal adjustment following a large decline in property values after the Great Financial Crisis. We find that local governments adjust tax rates to maintain stable tax revenues; there is no change in public employment levels and limited adjustments of public services. Our micro data on people's location further allows us to causally estimate the migration elasticity to a change in property tax rates. We find evidence of inter-state migration in response to an increase in property tax rates; and no statistically significant response of intra-state migration. Detailed property and location choice data reveal the elasticity of migration with regard to the property tax bill. An increase in the property tax bill by ten percent leads to an average increase in the migration propensity by about 1.5%.
UEA North America Meeting 2021 Honorable Mention
Presented at: Columbia University, Columbia Business School, AREUEA National Conference 2021, UEA North America Meeting 2021, EEA-ESEM 2022.
How do municipal finances interact with local labor market shocks? I show that the observed general equilibrium response to local labor market shocks contains an economically important amplification effect through local financial constraints. At the center of the local financial amplification channel is the housing market. Local governments in the United States receive a median share of 63.1% of own source revenues from property taxes. I show that exogenous shocks to local labor markets affect the housing market and exerts fiscal pressure on local government finances. Local governments-on average-increase property taxes and cut amenities. Both policy responses affect the relative attractiveness of a location which amplifies the initial shock. I estimate a multiplier of 1.7x through this local financial constraint channel.
Presented at: Public Policy Institute of California (PPIC), Columbia University, Hoover Institution.
RESEARCH PAPERS IN PROGRESS
“COVID-19 Infections Absent Residential Segregation” (with Harrison Hong, Jeffrey Kubik, Haaris Mateen, Neng Wang, Jinqiang Yang)
“Policy Preferences: A Computational Linguistic Approach” (with Anand Chitale, Lea Frermann and José Luis Montiel Olea)