Book
The Data Economy: Tools and Applications (w/ Laura Veldkamp)
Princeton University Press, 2025
Refereed Publications
(8) The Macroeconomics of Irreversibility
(w/ Andrés Blanco)
Review of Economic Studies (January, 2026)
Paper Appendix CEPR Faculti Video
We investigate how irreversible investment, arising from a wedge between the purchase and resale prices of capital, affects aggregate capital fluctuations. Irreversibility doubles the persistence of capital fluctuations and is crucial for reconciling micro-level investment behavior with macroeconomic propagation.
(7) Returns to Labor Mobility
(w/ Lars Ljungqvist & Thomas Sargent)
The Economic Journal (June, 2024)
Paper Appendix
Reliance on firm-size dynamics and shocks intermediated through neoclassical production functions yields significant returns to labor mobility that are robust to parameter perturbations, whereas reliance on labor-economics statistics to calibrate per-worker productivity processes can introduce fragilities.
(6) Cross-Phenomenon Restrictions: Unemployment Effects of Layoff Costs and Quit Turbulence
(w/ Lars Ljungqvist & Thomas Sargent)
Review of Economic Dynamics (Vol. 50, October 2023)
Paper Appendix
Cross-phenomenon restrictions associated with returns to labor mobility inform calibrations of productivity processes in macro-labor models.
(5) Bayesian Learning
(w/ Laura Veldkamp)
Handbook of Economic Expectations, Chapter 23 (November 2022)
Working Paper Science Direct
Learning is the process by which agents form beliefs. We survey the literature on Bayesian learning and consider the types of consequences these beliefs have on economic outcomes.
(4) Mismatch Cycles
(w/ Ana Figueiredo & Robert Ulbricht)
Journal of Political Economy (Vol. 130, No. 11, November 2022)
Paper Appendix Blog
During recessions, highly mismatched jobs are destroyed but also created. An equilibrium model of the labor market with directed search, multidimensional sorting, learning about skills, and aggregate shocks accounts for the cyclical dynamics of skill mismatch and occupational switching in the US.
(3) Aggregate Dynamics in Lumpy Economies
(w/ Andrés Blanco)
Econometrica (Vol. 89, No. 3, May 2021)
Paper Appendix Online Appendix
When agents make lumpy choices (investment, price-setting…), we show that two steady-state statistics, easily computed with microdata, predict how the economy responds to macro shocks and inform the size of adjustment frictions.
(2) Can Global Uncertainty Promote International Trade?
(w/ Laura Veldkamp & Michael Waugh)
Journal of International Economics (Vol. 126, Sep 2020)
Paper Appendix Codes Business Talk Interview
Terms-of-trade uncertainty can fuel more trade in a simple general-equilibrium trade model with information frictions.
(1) Firm Uncertainty Cycles and the Propagation of Nominal Shocks
(w/ Andrés Blanco)
American Economic Journal: Macroeconomics (Vol. 11, No. 1, Jan 2019)
Paper Appendix
Firm idiosyncratic uncertainty is a key determinant of micro pricing behavior and aggregate price flexibility.
Working Papers
(9) Lumpy Forecasts
(with Javier Turén)
New Version. Online Appendix CEPR Working Paper
Press: BSE Focus VoxEU Column
We document that professional forecasters adjust their inflation forecast in a lumpy way—periods of inaction followed by significant adjustments. Using a fixed-event forecasting framework, we assess the learning speed and the effects of the consensus forecast and individual beliefs on the extensive and intensive margins of forecast revisions.
(10) Self-Insurance in Turbulent Labor Markets
(with Ana Figueiredo, Cristiano Mantovani, and Alireza Sepahsalari)
New Version Online Appendix CEPR Working Paper
We study how wealth shapes workers’ outcomes in turbulent labor markets, where job displacement exposes workers to the risk of skill loss in a directed search model with incomplete markets, skill dynamics, and job “tiers” with distinct risk–return profiles.
Work in Progress
State-Dependent Forecasting in Volatile Times
(with Javier Turén)
Higher inflation volatility increases the frequency and size of forecast revisions and the passthrough of shocks.
Preliminary Draft Slides
Corporate Taxes, Investment Frictions, and Macroeconomic Dynamics
(w/ Andrés Blanco and Nicolás Oviedo)
We study how corporate taxation interacts with two investment frictions-fixed capital adjustment costs and irreversibility wedges-in determining the persistence of aggregate shocks.
Preliminary Draft
Monetary Policy and Corporate Tax Reforms
(w/ Andrés Blanco, Erin Markiewitz, and Nicolás Oviedo)
Preliminary Draft
Monetary policy rate increases following "long-run motivated" corporate income tax cuts.
Sufficient Statistics for Investment Dynamics: An Empirical Investigation
(w/ Andrés Blanco, Miguel Bandeira, Laura Castillo-Martínez, Madalena Gaspar and Nicolás Oviedo)
We test the sufficient-statistics formula for aggregate investment dynamics derived from a lumpy-adjustment model. Using state-space methods and Bayesian estimation on microdata from Chile and Colombia, we show that sufficient statistics successfully predict cumulative investment responses to aggregate productivity shocks.
SS for SS: State-Space Methods for Lumpy Economies
(w/ Miguel Bandeira and Laura Castillo-Martínez)
We introduce a general statistical framework to study aggregate shock propagation in a dynamic (S,s) economy, enabling researchers to combine micro and macro data to estimate parameters, cross-sectional distributions of latent states over time, impulse responses to aggregate shocks, and forecast any function of the cross-sectional distribution of lumpy variables.
Demand Uncertainty and Investment
(w/Priit Jeenas and Manuel García-Santana)
Notes
The Partial Data Barter Trades of the Digital Economy
Brooking Article
Dormant projects
Policy Uncertainty and Sovereign Bond Markets
(w/ Felix Matthys)
Government bond yields are affected differentially by global and country-specific policy uncertainty factors.
Price Duration and Passthrough
(w/ Federico Kochen and Daniel Sámano)
Exchange rate passthrough is larger for products with young (recently set) prices.
Preliminary Draft
Other Publications (In Spanish)
Baley (2022) La Heterogeneidad Empresarial y las Dinámicas Macroeconómicas, en Blog Nada es Gratis.
Baley, De la Peza and Martínez (2009) La Importancia del Sistema de Pensiones en el Desarrollo de los Mercados Financieros en Proceso de Innovación Financiera en la Economía Global, Banco de México
Baley (2009) El Registro de Garantías Mobiliarias y su Impacto en el Mercado de Crédito Garantizado, Tesis de Licenciatura, Instituto Tecnológico Autónomo de México Texto Slides
The Data Economy: Tools and Applications (w/ Laura Veldkamp)
Princeton University Press, 2025
Refereed Publications
(8) The Macroeconomics of Irreversibility
(w/ Andrés Blanco)
Review of Economic Studies (January, 2026)
Paper Appendix CEPR Faculti Video
We investigate how irreversible investment, arising from a wedge between the purchase and resale prices of capital, affects aggregate capital fluctuations. Irreversibility doubles the persistence of capital fluctuations and is crucial for reconciling micro-level investment behavior with macroeconomic propagation.
(7) Returns to Labor Mobility
(w/ Lars Ljungqvist & Thomas Sargent)
The Economic Journal (June, 2024)
Paper Appendix
Reliance on firm-size dynamics and shocks intermediated through neoclassical production functions yields significant returns to labor mobility that are robust to parameter perturbations, whereas reliance on labor-economics statistics to calibrate per-worker productivity processes can introduce fragilities.
(6) Cross-Phenomenon Restrictions: Unemployment Effects of Layoff Costs and Quit Turbulence
(w/ Lars Ljungqvist & Thomas Sargent)
Review of Economic Dynamics (Vol. 50, October 2023)
Paper Appendix
Cross-phenomenon restrictions associated with returns to labor mobility inform calibrations of productivity processes in macro-labor models.
(5) Bayesian Learning
(w/ Laura Veldkamp)
Handbook of Economic Expectations, Chapter 23 (November 2022)
Working Paper Science Direct
Learning is the process by which agents form beliefs. We survey the literature on Bayesian learning and consider the types of consequences these beliefs have on economic outcomes.
(4) Mismatch Cycles
(w/ Ana Figueiredo & Robert Ulbricht)
Journal of Political Economy (Vol. 130, No. 11, November 2022)
Paper Appendix Blog
During recessions, highly mismatched jobs are destroyed but also created. An equilibrium model of the labor market with directed search, multidimensional sorting, learning about skills, and aggregate shocks accounts for the cyclical dynamics of skill mismatch and occupational switching in the US.
(3) Aggregate Dynamics in Lumpy Economies
(w/ Andrés Blanco)
Econometrica (Vol. 89, No. 3, May 2021)
Paper Appendix Online Appendix
When agents make lumpy choices (investment, price-setting…), we show that two steady-state statistics, easily computed with microdata, predict how the economy responds to macro shocks and inform the size of adjustment frictions.
(2) Can Global Uncertainty Promote International Trade?
(w/ Laura Veldkamp & Michael Waugh)
Journal of International Economics (Vol. 126, Sep 2020)
Paper Appendix Codes Business Talk Interview
Terms-of-trade uncertainty can fuel more trade in a simple general-equilibrium trade model with information frictions.
(1) Firm Uncertainty Cycles and the Propagation of Nominal Shocks
(w/ Andrés Blanco)
American Economic Journal: Macroeconomics (Vol. 11, No. 1, Jan 2019)
Paper Appendix
Firm idiosyncratic uncertainty is a key determinant of micro pricing behavior and aggregate price flexibility.
Working Papers
(9) Lumpy Forecasts
(with Javier Turén)
New Version. Online Appendix CEPR Working Paper
Press: BSE Focus VoxEU Column
We document that professional forecasters adjust their inflation forecast in a lumpy way—periods of inaction followed by significant adjustments. Using a fixed-event forecasting framework, we assess the learning speed and the effects of the consensus forecast and individual beliefs on the extensive and intensive margins of forecast revisions.
(10) Self-Insurance in Turbulent Labor Markets
(with Ana Figueiredo, Cristiano Mantovani, and Alireza Sepahsalari)
New Version Online Appendix CEPR Working Paper
We study how wealth shapes workers’ outcomes in turbulent labor markets, where job displacement exposes workers to the risk of skill loss in a directed search model with incomplete markets, skill dynamics, and job “tiers” with distinct risk–return profiles.
Work in Progress
State-Dependent Forecasting in Volatile Times
(with Javier Turén)
Higher inflation volatility increases the frequency and size of forecast revisions and the passthrough of shocks.
Preliminary Draft Slides
Corporate Taxes, Investment Frictions, and Macroeconomic Dynamics
(w/ Andrés Blanco and Nicolás Oviedo)
We study how corporate taxation interacts with two investment frictions-fixed capital adjustment costs and irreversibility wedges-in determining the persistence of aggregate shocks.
Preliminary Draft
Monetary Policy and Corporate Tax Reforms
(w/ Andrés Blanco, Erin Markiewitz, and Nicolás Oviedo)
Preliminary Draft
Monetary policy rate increases following "long-run motivated" corporate income tax cuts.
Sufficient Statistics for Investment Dynamics: An Empirical Investigation
(w/ Andrés Blanco, Miguel Bandeira, Laura Castillo-Martínez, Madalena Gaspar and Nicolás Oviedo)
We test the sufficient-statistics formula for aggregate investment dynamics derived from a lumpy-adjustment model. Using state-space methods and Bayesian estimation on microdata from Chile and Colombia, we show that sufficient statistics successfully predict cumulative investment responses to aggregate productivity shocks.
SS for SS: State-Space Methods for Lumpy Economies
(w/ Miguel Bandeira and Laura Castillo-Martínez)
We introduce a general statistical framework to study aggregate shock propagation in a dynamic (S,s) economy, enabling researchers to combine micro and macro data to estimate parameters, cross-sectional distributions of latent states over time, impulse responses to aggregate shocks, and forecast any function of the cross-sectional distribution of lumpy variables.
Demand Uncertainty and Investment
(w/Priit Jeenas and Manuel García-Santana)
Notes
The Partial Data Barter Trades of the Digital Economy
Brooking Article
Dormant projects
Policy Uncertainty and Sovereign Bond Markets
(w/ Felix Matthys)
Government bond yields are affected differentially by global and country-specific policy uncertainty factors.
Price Duration and Passthrough
(w/ Federico Kochen and Daniel Sámano)
Exchange rate passthrough is larger for products with young (recently set) prices.
Preliminary Draft
Other Publications (In Spanish)
Baley (2022) La Heterogeneidad Empresarial y las Dinámicas Macroeconómicas, en Blog Nada es Gratis.
Baley, De la Peza and Martínez (2009) La Importancia del Sistema de Pensiones en el Desarrollo de los Mercados Financieros en Proceso de Innovación Financiera en la Economía Global, Banco de México
Baley (2009) El Registro de Garantías Mobiliarias y su Impacto en el Mercado de Crédito Garantizado, Tesis de Licenciatura, Instituto Tecnológico Autónomo de México Texto Slides
