Isaac Baley
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Research

Macro Fluctuations and Micro Frictions
Google Scholar                ERC Video Presentation                Research Statement
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Publications
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(7) Cross-Phenomenon Restrictions: Unemployment Effects of Layoff Costs and Quit Turbulence (w/ Lars Ljungqvist & Thomas Sargent)  
Review of Economic Dynamic (Vol. 50, October 2023) 
Paper      Appendix
Cross-phenomenon restrictions associated with returns to labor mobility inform calibrations of productivity processes in macro-labor models.  

(6) Returns to Labor Mobility (w/ Lars Ljungqvist & Thomas Sargent)   
The Economic Journal (Conditionally Accepted)
Paper        Appendix 
Reliance on firm size dynamics and shocks intermediated through neoclassical production functions yields large returns to labor mobility that are robust to parameter perturbations, while the reliance on labor economics statistics to calibrate per-worker productivity processes can give rise to fragilities.

(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 (with 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     
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 (with 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.
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Working Papers
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The Macroeconomics of Partial Irreversibility (w/ Andrés Blanco)    R&R at Review of Economic Studies
Paper       Appendix
We investigate the macroeconomic effects of partially irreversible investment arising from a wedge between the buying and selling price of capital and apply the theory to study corporate tax reforms. Corporate income tax cuts improve the allocation of capital, decrease aggregate Tobin's q, and slow down capital fluctuations.  ERC Grant MacroTaxReforms.

​Self-Insurance in Turbulent Labor Markets (with Ana Figueiredo, Cristiano Mantovani, and Alireza Sepahsalari)
Paper
We investigate the consequences of skill obsolescence on labor market outcomes when workers self-insure in the presence of imperfect financial markets and search frictions. 

Work in Progress

Lumpy Forecasts (with Javier Turén) 
Draft coming soon!
We document that professional forecasters adjust their inflation forecast in a lumpy way—periods of inaction followed by large adjustments. Using a fixed-event forecasting framework, we assess the learning speed and the effect of the consensus forecast and individual beliefs on forecast revisions’ extensive and intensive margins of forecast revisions. 

Monetary Policy and Corporate Tax Reforms (w/ Andrés Blanco and Erin Markiewitz)
Paper 
Monetary policy rate increases following "long-run motivated" corporate income tax cuts. ERC Grant MacroTaxReforms.

​Corporate Taxes and Investment Frictions (w/ Andrés Blanco)
We study how corporate taxation interacts with two investment frictions: fixed capital adjustment costs and partial irreversibility.

ERC Grant MacroTaxReforms.
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The Data Economy: Tools and Applications (w/ Laura Veldkamp) 
Book forthcoming in 2024 at Princeton University Press



Dormant projects
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Policy Uncertainty and Sovereign Bond Markets (with Felix Matthys)
Government bond yields are affected differentially by global and country-specific policy uncertainty factors. ​

Price Duration and Passthrough (with 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

CO-AUTHORS 


Andrés Blanco
University of Michigan


Ana Figueiredo 
Erasmus Rotterdam

Federico Kochen
Columbia, CEMFI


Lars Ljungqvist
Stockholm School of Economics & NYU

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Cristiano Mantovani
Princeton and Melbourne​
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Erin Markiewitz
University of Michigan

Felix Matthys
ITAM & Princeton

​Daniel Sámano
Banco de México


​Thomas Sargent
NYU, NYU Stern & Hoover Institution

Nicolás Oviedo
Universitat Pompeu Fabra & BSE 

Alireza Sepahsalari
University of Bristol 
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Javier Turén
Universidad Católica de Chile

​Robert Ulbricht
Boston College

​Laura Veldkamp
Columbia Business School


Mike Waugh
Minneapolis FED


PhD STUDENTS
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GRADUATED

Ana Figueiredo 
(UPF, 2018)
Erasmus Rotterdam
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Andrea Chiavari (UPF, 2022)
University of Oxford

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Cristiano Mantovani (UPF, 2023)
Princeton and Melbourne

Marta Morazzoni (UPF, 2023)
University College London
JOB MARKET 2024

Lauri Esala
UPF
CURRENT

Jiayi Lin
UPF

Alberto Pobbe
UPF

Alejandro Rábano
UPF

Simone Zanella
UPF
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