I am an Assistant Professor of Finance at Imperial College Business School. I am a macroeconomist interested in financial crises and the associated macroeconomic stabilisation policies.
PhD in Economics, 2019 - 2024
University of California San Diego
MA in International and Development Economics, 2015 - 2016
Yale University
BSc in Economics, 2009 - 2012
London School of Economics
A vast theoretical literature claims that increasing interest rates reduces bank leverage, therefore making banks safer. The empirical validity of this claim is critical to improving our understanding of the transmission of monetary policy through banks in addition to informing the ongoing debate on whether monetary policy should be used to support financial stability. I show empirically that raising interest rates actually increases bank leverage. I propose and empirically validate a mechanism that explains the overall increase in bank leverage in response to monetary policy shocks which I term the loan-loss mechanism: contractionary shocks increase loan losses, reduce bank profits and equity, and ultimately increase bank leverage. I document why much of the theoretical literature is unable to explain the leverage response and develop a banking model where floating-rate loans entail a trade-off between interest rate risk and credit risk, which generates the loan-loss mechanism. Using microdata, I provide empirical evidence consistent with floating-rate loans hedging interest rate risk at the expense of generating loan losses.
Prizes:
- Young Economist Prize (Runner-Up)
- Southern Economic Association Graduate Student Prize
- Rady School of Management Libby Award
- Walter Heller Memorial Prize (Best 3rd Year Paper)
External Seminars and Conferences:
- Southern Economic Association Annual Conference (2023)
- Federal Reserve Board Monetary Affairs Seminar (2023)
- King’s College London QCGBF Annual Conference (2023)
- Midwest Macroeconomic Conference (2023)
- London Business School TADC (accepted)
Cieslak et al. (2019) show that the equity premium in the US since 1994 is earned entirely in even weeks of the Federal Open Market Committee meeting cycle and that these same even weeks also drive international stock returns. Updating their data, I find that their US result does not hold out-of-sample and show that with an extended sample, the result loses its robustness as early as 2004. As further evidence, I show that their proposed mechanism also does not hold from 2004 onwards. Examining the data prior to 2004, I show that there are important outliers that appear to be driving the result. Finally, I construct central bank cycles for the Bank of England and the Bank of Japan and show, when accounting for potential pre-announcement effects, their international result also no longer holds.
We propose a model to study the consequences of including financial stability among the central bank’s objectives when market players are strategic, and surprises compromise their stability. In this setup, central banks underreact to economic shocks, a prediction consistent with the Federal Reserve’s behavior during the 2023 banking crisis. Moreover, policymakers’ stability concerns bias investors’ choices, inducing inefficiency. If the central bank has private information about its policy intentions, the equilibrium forward guidance entails an information loss, highlighting a trade-off between stabilizing markets through policy and communication. A “kitish” central banker, who puts less weight on stability, reduces these inefficiencies.
This paper analyzes food inflation trends in Sub-Saharan Africa (SSA) from 2000 to 2016 using two novel datasets of disaggregated CPI baskets. Average food inflation is higher, more volatile, and similarly persistent as non-food non-fuel inflation, especially in low-income countries in SSA. We find evidence that food inflation became less persistent from 2009 onwards, related to recent improvements in monetary policy frameworks. We also find that high food prices are driven mainly by non-tradable food in SSA and there is incomplete pass-through from world food and fuel prices and exchange rates to domestic food prices. Taken together, these finding suggest that central banks in low-income countries with high and persistent food inflation should continue to pay attention to headline inflation to anchor inflation expectations. Other policy levers include reducing tariffs and improving storage and transport infrastructure to reduce food pressures.
Teaching Assistant: 2023
Teaching Assistant: 2022
Teaching Assistant: 2020, 2021, 2022
Teaching Assistant: 2021
Guest Lecturer: 2016