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June 2023
No Taxation without Reallocation: The Distributional Effects of Tax Changes

This paper quantifies the distributional effects of tax changes in the United States. A functional vector autoregression framework is used to estimate the joint dynamics of tax shocks, the cross-sectional distribution of disposable income, and macroeconomic aggregates. I distinguish between changes in personal and corporate income taxes and investigate the distributional effects on families and business owners. I document that tax changes affect incomes along the distribution unevenly and that the family status and the source of income matters. Tax reductions benefit high incomes and disadvantage lower incomes. Entrepreneurs and families benefit more from tax cuts than individuals without business income and non-families.
Fatal Austerity| with Alexander Kriwoluzky, Moritz Schularick, Lucas ter Steege
This paper quantifies the macroeconomic consequences of the fiscal austerity program that preceded the power grab of the Nazi party in Germany in 1933. Between 1930 and 1932, German Chancellor Brüning enacted a series of large expenditure cuts and tax increases against the backdrop of a depressed economy and the rise of political extremism. We use a novel granular fiscal dataset to identify the macroeconomic effects of Brüning’s austerity policies. We find that the austerity shocks reduced German GDP by more than four percent and caused an increase in unemployment by almost two million, paving the way for the success of extremist parties.
May 2024
July 2024
Active or Passive? Revisiting the Role of Fiscal Policy During High Inflation| with Alexander Kriwoluzky | Accepted with minor revisions in the  European Economic Review

We investigate the interplay of the monetary-fiscal policy mix during times of crisis by drawing insights from the Great Inflation of the 1960s and 1970s. We use a Sequential Monte Carlo (SMC) algorithm to estimate a DSGE model with three distinct monetary/fiscal policy regimes. We show that in such a model SMC outperforms standard sampling algorithms because it is better suited to deal with multimodal posteriors, an outcome that is highly likely in a DSGE model with monetary-fiscal policy interactions. From the estimation with SMC a differentiated perspective results: pre-Volcker macroeconomic dynamics were similarly driven by passive monetary/passive fiscal policy and fiscal dominance. We apply these insights to study the post-pandemic inflation period.


120 Years of Temperature Increases and Economic Growth
with Moritz Schularick, and Petr Sedláček 
Creating Expectations: Propaganda and the Economic Recovery in NaziGermany
with Alexander Kriwoluzky, Andrea Papadia, and Moritz Schularick
Crisis and Inequality
with Òscar Jordá, Alan Taylor, Moritz Schularick, and Nadezhda Zhuravleva
Distributional Effects of Aggregate Shocks: Functional vs. Panel Approaches
with Chi Hyun Kim, and Frank Schorfheide 
Fiscal Capacity in the Euro Area
with Chi Hyun Kim 
Natural Disaster and Financial Stability: Evidence from 120 Years
with Moritz Schularick, and Petr Sedláček 
Wealth Inequality in Finland
with Chi Hyun Kim, Matti Mitrunen, Timm Prein, and Oskari Vähämaa

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