Alp Simsek Profile picture
Economist. Research in macroeconomics and finance.
Jan 21 11 tweets 4 min read
Inflation made a comeback. Many criticized the Fed for tolerating high inflation

The Fed defended loose policy by emphasizing temporary supply shortages

In a new paper with Caballero, we analyze the OPTIMAL monetary policy with temporary supply shocks
1/
dropbox.com/s/x2i8a1o26ql6… Image As benchmark, in the textbook NK model, supply shocks alone do NOT create a rationale for inflation

In a temporary supply contraction, the Fed raises rates and contracts demand until the output gap is zero

Only after the supply recovers, the Fed cuts rates and boosts demand
2/ Image
Nov 24, 2021 12 tweets 2 min read
Turkiye cok yanlis bir yola girdi. Uygulanan para politikasinin cok hatali oldugunu gormek icin derin analizlere gerek yok. Ekonomi ders kitaplarinin "yapma" dedigi seyi yapip ders kitaplarini dogru cikariyoruz

Yine de dusuncelerimi kisaca not dusmeyi sorumluluk goruyorum 1/N Erdogan'in gorusleri cok siradisi. Fakat Bahceli makro teoriye nispeten uygun konusuyor. Ondan anladigim:
"Yuksek faiz talebi ve ekonomiyi daraltacak. Bunu istemiyoruz. Enflasyonla mucadeleyi talebi daraltarak degil arzi arttirarak yapacagiz."

Kulaga guzel geliyor fakat... 2/N
Nov 15, 2021 4 tweets 1 min read
Persistent inflation was easy to predict from a basic IS-MP analysis with wealth effects, fiscal policy, and multipliers. The driving force is demand >> supply and this will remain so unless house and stock prices come down or supply recovers a lot 1/4 The question is not why we had inflation but whether it can be optimal monetary policy to allow for some inflation in these circumstances. In fact, there is one argument for having some overheating and inflation

2/4
Feb 1, 2021 8 tweets 2 min read
The GameStop saga has many interesting dimensions. But there is an aspect that I don't think is sufficiently appreciated. In general, retail speculation hurts the retail traders the most. Platforms like Robinhood made the problem worse by making speculation cheaper and easier 1/n Empirical evidence shows that speculation by individual investors substantially lowers their returns, due to excessive risks, transaction costs, and a poor ability to pick stocks and to time the market. See the excellent review paper by Barber&Odean 2/n

sciencedirect.com/science/articl…
May 8, 2020 36 tweets 12 min read
The Covid-19 shock almost caused a financial crisis. Central banks reacted aggressively to stop the free fall. My research with Ricardo Caballero sheds light on these events. Long thread! 1/N #EconTwitter

VoxEU tinyurl.com/y9wd9g98

Paper tinyurl.com/ybzl3wkn The economy produces goods and services that must be absorbed by spending by households, firms, governments... Much of modern macro is concerned with equilibrium in goods markets 2/N