COSIMO PETRACCHI
ASSISTANT PROFESSOR AT THE TOR VERGATA UNIVERSITY OF ROME
My research field is macroeconomics and my research agenda lies at the intersection between monetary economics and international macroeconomics and finance.
researcH
MR. KEYNES AND THE “CLASSICS”;
A SUGGESTED REINTERPRETATION
(with Gauti B. Eggertsson)
HYPERINFLATION AND
EXCHANGE-RATE REGIMES
Works in Progress
EXCHANGE-RATE REGIME
BREAKS AND FIRMS' BEHAVIOR
(with Luca Riva and
Marco Stenborg Petterson)
THE MUSSA PUZZLE AND
PRODUCT-LEVEL PRICES
(with Jason Kim)
2022 Best JMP Award – Special Mention of Merit
EEA and UniCredit Foundation
I characterize exchange-rate regime breaks for thirty countries between 1960 and 2019, and I document that while they affect the volatilities of nominal and real exchange rates they do not change the volatilities of other real macro fundamentals (output, consumption, investment, and net exports). This is true even in countries in which exports and imports represent a large component of gross domestic product. I propose a model with exporter-importers and segmented global currency markets. The model matches the behavior of nominal and real exchange rates and real macro fundamentals across exchange-rate regimes, even for economies in which the sum of exports and imports is more than 100% of gross domestic product.
One of the most compelling pieces of evidence for monetary non-neutrality is the Mussa puzzle: the break in the monetary regime when the Bretton Woods system broke down increased the volatility of not only the nominal exchange rate but the real exchange rate. Using data covering forty-four countries from 1954 to 2019, I find that the Mussa puzzle is generalizable: any break in a monetary regime that changes the volatility of the nominal exchange rate also changes the volatility of the real exchange rate. This provides further evidence of monetary non-neutrality.
This paper revisits and proposes a resolution to an empirical and theoretical controversy between Keynes and the “classics” (or monetarists). The controversy dates to Keynes’s General Theory (1936)—most famously formalized in Hicks’s (1937) classic Econometrica article, in which the IS-LM model is first formally stated. We first replicate empirical tests formulated in the late 1960s and ’70s and show that more recent data have more statistical power and resolve the empirical debate in favor of the Keynesians, at least according to the criteria of the literature at that time. We then show, using a simple dynamic stochastic general equilibrium (DSGE) model, that the empirical tests suffer from the Lucas (1976) critique, as the conclusion fundamentally depends upon the assumed policy regime. Nevertheless, we argue, this new empirical result is useful: it provides evidence for the existence of a “Keynesian policy regime” according to which traditional monetary expansion loses its impact in the absence of a policy regime change, in the sense of Sargent (1982).
TEACHING
INSTRUCTOR OF RECORD
How a Nation's Economy Works: An Introduction to Macroeconomics (online pre-college course), Brown University
Summer 2020 - Evaluation: 4.52/5
How a Nation's Economy Works: An Introduction to Macroeconomics (pre-college course), Brown University
Summer 2019 - Evaluation: 4.38/5
TEACHING ASSISTANT
Advanced Macroeconomics: Monetary, Fiscal, and Stabilization Policies (undergraduate course), Brown University
Professor Gauti B. Eggertsson; Fall 2022 - Evaluation: 4.75/5
The ZLB and Secular Stagnation, EABCN Training School
Professor Gauti B. Eggertsson; Summer 2021 - Evaluation: Not Assessed
Macroeconomics II (graduate course), Brown University
Professor Joaquin Blaum and Professor Gauti B. Eggertsson; Spring 2021 - Evaluation: 4.73/5
Intermediate Macroeconomics (undergraduate course), Brown University
Professor Manuel Lancastre; Fall 2020, Spring 2020, Fall 2019 - Evaluation: 4.61/5, 4.55/5, 4.66/5
Macroeconomics II (graduate course), Brown University
Professor Neil Mehrotra and Professor Gauti B. Eggertsson; Spring 2019 - Evaluation: 4.92/5
Intermediate Macroeconomics (undergraduate course), Brown University
Professor Pascal Michaillat; Fall 2018 - Evaluation: 4.53/5