PUBLICATION
Interest Rate Misalignments and Monetary Policy: Evidence from U.S. StatesÂ
with Zo Andriantomanga and N. Kundan Kishor. Economic Inquiry, 2026. [PDF] [Replication Package]
We examine whether a uniform monetary policy effectively addresses diverse state-level economic conditions in the U.S. Using quarterly data from 1989 to 2017 for 33 states, we construct state-optimal interest rates based on Taylor rule frameworks incorporating local inflation and unemployment gaps. Deviations from the federal funds rate are large, persistent, and cluster regionally. Local projections show that a 1 pp positive deviation is associated with a 0.6 pp decline in headline inflation and an increase in unemployment, with the strongest effects in non-tradable sectors. State-specific deviation shocks elicit larger and longer-lasting responses than aggregate shocks, underscoring the importance of cross-sectional heterogeneity.
JOB MARKET PAPER
The Output Gap: Method Choice, Data Revisions, and Predictive Performance
2026.
This paper compares the eight most widely used methods for estimating the U.S. output gap, applying each to both revised and real-time quarterly data from 1980 onward. The resulting gap estimates disagree markedly in level, volatility, and cyclical timing, and these differences are compounded by data revisions. Some methods, particularly the standard and refined Beveridge-Nelson decompositions and the Hamilton filter, keep close agreement between their real-time and final estimates, while deterministic trend approaches show large and persistent revisions. To assess whether these differences matter economically, I evaluate the gap measures in two applications, recession prediction and output growth forecasting. In real time, the Beveridge-Nelson measures perform best among the individual methods, providing the strongest short-horizon recession discrimination and the most accurate output growth forecasts. With revised data, the HP filter performs best at longer recession horizons and, once the 2020 rebound is excluded, in output growth forecasting. Forecast combinations built on Bates-Granger weighting and partially-egalitarian LASSO selection hold their performance across data vintages.
WORKING PAPERS
Financial Development and Industrial R&D: Financial Depth Matters
with Rebecca Neumann, 2026.
Does it matter which dimension of a country's financial system is well developed for how its industries fund innovation? Using industry-level data across 18 OECD countries from 1995 to 2019 and the IMF's multidimensional Financial Development Index, we examine how the depth, access, and efficiency of financial institutions and markets shape R&D intensity. Following the external finance dependence approach, we interact each financial development measure with an industry's reliance on outside capital. The effect runs through depth. The depth of financial institutions, and to a lesser extent of financial markets, raises R&D intensity in the industries that depend most on external finance, while access and efficiency show little systematic effect. The result is strongest in manufacturing and holds under a dynamic panel treatment. What supports industrial innovation is the scale of financial intermediation, its capacity to supply large volumes of capital, rather than its reach or efficiency.
Real-Time Output Gaps and Inflation Forecasts
with Rebecca Neumann, 2026.
Asks whether real-time output gaps improve inflation forecasts once inflation's own persistence is accounted for, judging the Phillips curve against both a random walk and the autoregression it nests. Slack contributes at short horizons and little beyond, and what it contributes concentrates in a few episodes rather than holding steady.
Government Spending and Industrial R&D
with Rebecca Neumann, 2026.
Interacts fiscal variables with an industry's exposure to government procurement, built from input-output tables. Directed public research funding reallocates private R&D toward the industries that sell to government rather than raising it economy-wide, and the two effects offset almost exactly at the average level of procurement dependence.
WORK IN PROGRESS
Estimating the Natural Rate of Interest at the U.S. State Level
Adapts the Holston, Laubach, and Williams framework to individual states, asking whether the benchmark for judging policy stance is itself regionally uneven.