Working papers
Asymmetric Effects of Monetary Policy on Firms (Accepted, Journal of Money, Credit and Banking)
Abstract: This paper documents firm-level evidence on the asymmetric effects of monetary policy in the US. Focusing on 1980q3-2019q4 period, I find that monetary tightenings show larger effects on firms’ employment and sales than monetary easings. In comparison, investment rate does not generate significant asymmetry in response to sign-dependent monetary policy shocks due to firm-specificity of capital and investment irreversability. Furthermore, I exploit cross-sectional variation and show that employment of small, non-dividend payer, low credit rating and young firms displays larger contractions in response to a monetary tightening.
Who Gains from Corporate Tax Cuts? (with James Cloyne and Paolo Surico) (Rej&R, Journal of Monetary Economics)
NBER Working Paper No.31278
Media Coverage: Forbes, Brookings Institute, LBS, American Experiment, National Affairs
Abstract: Goods producers increase their capital expenditure and employment in response to a cut in marginal corporate income tax rates or an increase in investment tax credits. In contrast, companies in the service sector mostly use any tax windfall to increase dividend payouts. We base our conclusions on a novel measure of U.S. firm-specific tax shocks that combines changes in statutory tax rates faced by each firm with narrative identified legislated U.S. federal tax changes between 1950 and 2006.
Corporate Tax Policy and Monetary Effectiveness: A Quasi-Experimental Approach (Under Review)
Abstract: This paper documents the first empirical evidence on how corporate tax policy affects monetary policy outcomes. Using exogenous marginal tax reforms in the US, we show that the average impact of monetary policy differs based on the tax treatments firms receive. Specifically, we find that monetary policy is more effective on investment when firms face tax increases than when firms face stable taxes. Moreover, we show that monetary policy is least effective when firms face marginal tax cuts.
-Finalist Paper for the Young Economists Prize by QCGBF
Downward Wage Rigidity and Asymmetric Effects of Monetary Policy (with Laura Jackson) (Submitted)
Abstract: This paper provides industry-level evidence on the presence of downward nominal wage rigidity and asymmetric effects of monetary policy in the US labor markets. Focusing on industry-level data from 1975q1 to 2020q4, we find strong evidence for the downward nominal wage rigidity (DNWR) channel in service-sector industries. Consistent with this channel, service-sector industries with downward-sticky (downward-flexible) wages show larger (muted) employment losses in response to monetary contractions. On the other hand, we find that the DNWR channel holds weakly in the manufacturing sector and we examine this in the context of trade integration policies of recent decades. Our results show that increasing exposure to the China shock weakens the DNWR mechanism for manufacturing industries.
Work in Progress
Political Instability and Long Run Growth in Eurasia (with K. Kıvanc Karaman)
Abstract: There have been numerous studies on the impact of political instability on economic outcomes, however these studies mostly focus on the modern period. This study investigates the impact of differences in political instability levels across the Old World (Eurasia and North Africa) on long-term economic performance.
-The Scientic and Technological Research Council of Turkey - TUBITAK - 3501 Program Fellowship Recipient, 2012-2014
Abstract: This paper documents firm-level evidence on the asymmetric effects of monetary policy in the US. Focusing on 1980q3-2019q4 period, I find that monetary tightenings show larger effects on firms’ employment and sales than monetary easings. In comparison, investment rate does not generate significant asymmetry in response to sign-dependent monetary policy shocks due to firm-specificity of capital and investment irreversability. Furthermore, I exploit cross-sectional variation and show that employment of small, non-dividend payer, low credit rating and young firms displays larger contractions in response to a monetary tightening.
Who Gains from Corporate Tax Cuts? (with James Cloyne and Paolo Surico) (Rej&R, Journal of Monetary Economics)
NBER Working Paper No.31278
Media Coverage: Forbes, Brookings Institute, LBS, American Experiment, National Affairs
Abstract: Goods producers increase their capital expenditure and employment in response to a cut in marginal corporate income tax rates or an increase in investment tax credits. In contrast, companies in the service sector mostly use any tax windfall to increase dividend payouts. We base our conclusions on a novel measure of U.S. firm-specific tax shocks that combines changes in statutory tax rates faced by each firm with narrative identified legislated U.S. federal tax changes between 1950 and 2006.
Corporate Tax Policy and Monetary Effectiveness: A Quasi-Experimental Approach (Under Review)
Abstract: This paper documents the first empirical evidence on how corporate tax policy affects monetary policy outcomes. Using exogenous marginal tax reforms in the US, we show that the average impact of monetary policy differs based on the tax treatments firms receive. Specifically, we find that monetary policy is more effective on investment when firms face tax increases than when firms face stable taxes. Moreover, we show that monetary policy is least effective when firms face marginal tax cuts.
-Finalist Paper for the Young Economists Prize by QCGBF
Downward Wage Rigidity and Asymmetric Effects of Monetary Policy (with Laura Jackson) (Submitted)
Abstract: This paper provides industry-level evidence on the presence of downward nominal wage rigidity and asymmetric effects of monetary policy in the US labor markets. Focusing on industry-level data from 1975q1 to 2020q4, we find strong evidence for the downward nominal wage rigidity (DNWR) channel in service-sector industries. Consistent with this channel, service-sector industries with downward-sticky (downward-flexible) wages show larger (muted) employment losses in response to monetary contractions. On the other hand, we find that the DNWR channel holds weakly in the manufacturing sector and we examine this in the context of trade integration policies of recent decades. Our results show that increasing exposure to the China shock weakens the DNWR mechanism for manufacturing industries.
Work in Progress
Political Instability and Long Run Growth in Eurasia (with K. Kıvanc Karaman)
Abstract: There have been numerous studies on the impact of political instability on economic outcomes, however these studies mostly focus on the modern period. This study investigates the impact of differences in political instability levels across the Old World (Eurasia and North Africa) on long-term economic performance.
-The Scientic and Technological Research Council of Turkey - TUBITAK - 3501 Program Fellowship Recipient, 2012-2014