Andres Blanco

Working papers

1. The Macroeconomics of Wage Rigidity and Job Separations (with Andres Drenik, Christian Moser, and Emilio Zaratiegui, first draft:  June 2022) 

   • We develop a theory of quits and layoffs with search frictions, idiosyncratic and aggregate shocks, sticky wages, and two-sided lack of commitment.

   • Paper  Online Appendix Slides 

2. Nonlinear Inflation Dynamics in Menu Cost Economies  (with Corina Boar, Callum Jones, and Virgiliu Midrigan, first draft: December 2022)

   • We show that canonical menu cost models cannot reproduce the extent to which the fraction of price changes increases with inflation. We resolve it by extending the standard multi-product menu cost model along two dimensions: strategic complementarities are at the firm level, and products a firm sells are imperfect substitutes.

   • Paper  Online Appendix  Slides

3. How Does Inflation "Grease the Wheels" in a Frictional Labor Market? (with Andres Drenik, first draft: July 2023) 

   • We unify a theory of frictional labor markets with a theory of nominal wage adjustment. The model features worker heterogeneity, endogenous quits and layoffs, on-the-job search, and on-the-job wage renegotiation. We parametrize the model to match important features of the wage change distribution in microdata and use it to reproduce the anatomy of the labor market during Argentina's 2001 inflation episode.

   • Paper Slides

5. The Inflation accelerator  (with Corina Boar, Callum Jones, and Virgiliu Midrigan, first draft: June 2024)

3. • We develop a tractable sticky price model in which the frequency of price changes evolves endogenously over time and reduces to a one-equation extension of the Calvo model. Applied to the U.S.,  our model predicts that the slope of the Phillips curve ranges from 0.02 in the 90' to 0.20 in the 70's and 80'.

   • Paper  Online Appendix  Slides

6. Nonlinear Dynamics in Menu Cost Economies? Evidence from U.S. Data  (with Corina Boar, Callum Jones, and Virgiliu Midrigan, first draft: July 2024)

3. • Standard menu cost models cannot simultaneously reproduce the dispersion in the size of price changes and the increases in the frequency of price in the U.S. time-series.

   • Paper

7.  A Theory of How Workers Keep Up With Inflation  (with Hassan Afrouzi, Andres Drenik, and Erik Hurst, first draft: August 2024)

3. • Develop a model of frictional labor markets with nominal rigidities. We show that the model matches worker flows and nominal wage changes during 2021-2024 with an isolated inflation surge. 

   • Paper  Slides

Views are my own and do not necessarily reflects those of the Board of Governors or the Federal Reserve System