Pub Date : 2026-01-13DOI: 10.1016/j.jmoneco.2026.103896
Toyoichiro Shirota
This study explores optimal monetary policy in an economy with seasonal wage staggering. The findings reveal that the slope of the Phillips curve and the weights in the welfare loss function systematically differ by quarter. Consequently, optimal policy responses vary depending on the timing of shocks within a calendar year. However, implementing history-dependent policy rules can effectively mitigate much of the welfare deterioration that would otherwise occur when policymakers fail to adopt these quarter-specific optimal policy responses.
{"title":"The timing of shocks matters in optimal monetary policy","authors":"Toyoichiro Shirota","doi":"10.1016/j.jmoneco.2026.103896","DOIUrl":"10.1016/j.jmoneco.2026.103896","url":null,"abstract":"<div><div>This study explores optimal monetary policy in an economy with seasonal wage staggering. The findings reveal that the slope of the Phillips curve and the weights in the welfare loss function systematically differ by quarter. Consequently, optimal policy responses vary depending on the timing of shocks within a calendar year. However, implementing history-dependent policy rules can effectively mitigate much of the welfare deterioration that would otherwise occur when policymakers fail to adopt these quarter-specific optimal policy responses.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"158 ","pages":"Article 103896"},"PeriodicalIF":4.1,"publicationDate":"2026-01-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145979291","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-03DOI: 10.1016/j.jmoneco.2025.103885
Yuliya Rychalovska , Sergey Slobodyan , Rafael Wouters
This paper proposes a strategy to exploit timely information from survey data to disentangle the effects of persistent and transitory shocks driving the real business cycle in DSGE models. Enhanced identification of fundamental shocks leads to significant improvement in the model’s fit. We also examine how structural models with alternative expectation formation mechanisms can address the limitations in information processing often observed in surveys. Our analysis shows that Rational Expectations model with observed survey data generates predictable forecast errors, inheriting this property from survey expectations. We emphasize an important role of the time-varying propagation mechanism under learning, which reduces the constrains imposed by the complete rationality assumption and allows for more efficient integration of surveys in macro models.
{"title":"Professional survey forecasts and expectations in DSGE models","authors":"Yuliya Rychalovska , Sergey Slobodyan , Rafael Wouters","doi":"10.1016/j.jmoneco.2025.103885","DOIUrl":"10.1016/j.jmoneco.2025.103885","url":null,"abstract":"<div><div>This paper proposes a strategy to exploit timely information from survey data to disentangle the effects of persistent and transitory shocks driving the real business cycle in DSGE models. Enhanced identification of fundamental shocks leads to significant improvement in the model’s fit. We also examine how structural models with alternative expectation formation mechanisms can address the limitations in information processing often observed in surveys. Our analysis shows that Rational Expectations model with observed survey data generates predictable forecast errors, inheriting this property from survey expectations. We emphasize an important role of the time-varying propagation mechanism under learning, which reduces the constrains imposed by the complete rationality assumption and allows for more efficient integration of surveys in macro models.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"158 ","pages":"Article 103885"},"PeriodicalIF":4.1,"publicationDate":"2026-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145898047","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-01DOI: 10.1016/j.jmoneco.2025.103884
Indira Puri , Laura Veldkamp
We combine insights from the medical and artificial intelligence (AI) literatures to propose a novel model, which suggests that the expansion of AI may exacerbate cognitive inequality. Information providers maximize profit by tailoring the complexity of content, offering less cognition-enhancing content to less able customers. While individuals with high cognitive abilities may benefit from this increased within-cognitive-group homogeneity, those with lower cognitive abilities – and even children – may suffer adverse effects. Anecdotal data from political discourse and cognitive skills scores are consistent with the model predictions. The findings introduce a new consideration to the debate on financial literacy and AI regulation.
{"title":"Artificial intelligence and cognitive inequality","authors":"Indira Puri , Laura Veldkamp","doi":"10.1016/j.jmoneco.2025.103884","DOIUrl":"10.1016/j.jmoneco.2025.103884","url":null,"abstract":"<div><div>We combine insights from the medical and artificial intelligence (AI) literatures to propose a novel model, which suggests that the expansion of AI may exacerbate cognitive inequality. Information providers maximize profit by tailoring the complexity of content, offering less cognition-enhancing content to less able customers. While individuals with high cognitive abilities may benefit from this increased within-cognitive-group homogeneity, those with lower cognitive abilities – and even children – may suffer adverse effects. Anecdotal data from political discourse and cognitive skills scores are consistent with the model predictions. The findings introduce a new consideration to the debate on financial literacy and AI regulation.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"157 ","pages":"Article 103884"},"PeriodicalIF":4.1,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145883931","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-20DOI: 10.1016/j.jmoneco.2025.103883
Emil Holst Partsch , Ivan Petrella , Emiliano Santoro
Durables’ interest-rate sensitivity and their persistent comovement with nondurable spending are hallmarks of monetary policy transmission. We develop a two-sector HANK model that replicates this pattern—both across spending categories and among households sorted by liquid asset holdings, consistent with empirical evidence. Direct effects of real interest rate changes are quantitatively important in reproducing sectoral expenditure comovement, while infrequent information updating is crucial to match the hump-shaped dynamics of sectoral and aggregate expenditures. Income effects are essential to preventing counterfactual declines in nondurable spending resulting from fiscal interventions specifically aimed at stimulating durable purchases.
{"title":"Consumer durables and monetary policy according to HANK","authors":"Emil Holst Partsch , Ivan Petrella , Emiliano Santoro","doi":"10.1016/j.jmoneco.2025.103883","DOIUrl":"10.1016/j.jmoneco.2025.103883","url":null,"abstract":"<div><div>Durables’ interest-rate sensitivity and their persistent comovement with nondurable spending are hallmarks of monetary policy transmission. We develop a two-sector HANK model that replicates this pattern—both across spending categories and among households sorted by liquid asset holdings, consistent with empirical evidence. Direct effects of real interest rate changes are quantitatively important in reproducing sectoral expenditure comovement, while infrequent information updating is crucial to match the hump-shaped dynamics of sectoral and aggregate expenditures. Income effects are essential to preventing counterfactual declines in nondurable spending resulting from fiscal interventions specifically aimed at stimulating durable purchases.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"157 ","pages":"Article 103883"},"PeriodicalIF":4.1,"publicationDate":"2025-12-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145840015","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-17DOI: 10.1016/j.jmoneco.2025.103880
Nils H. Lehr , Pascual Restrepo
Leading AI firms claim to prioritize social welfare. How should firms with a social mandate price and deploy AI? We derive pricing formulas that depart from profit maximization by incorporating incentives to improve welfare and reduce labor disruptions. Using US data, we evaluate several scenarios. A welfarist firm that values both profit and welfare should price closer to marginal cost, as efficiency gains outweigh distributional concerns. A conservative firm focused on labor-market stability should price above the profit-maximizing level in the short run, especially when its AI may displace low-income workers. Overall, socially minded firms face a trade-off between expanding access to AI and the resulting loss in profits and labor market risks.
{"title":"The price of intelligence: How should socially-minded firms price and deploy AI?","authors":"Nils H. Lehr , Pascual Restrepo","doi":"10.1016/j.jmoneco.2025.103880","DOIUrl":"10.1016/j.jmoneco.2025.103880","url":null,"abstract":"<div><div>Leading AI firms claim to prioritize social welfare. <em>How should firms with a social mandate price and deploy AI?</em> We derive pricing formulas that depart from profit maximization by incorporating incentives to improve welfare and reduce labor disruptions. Using US data, we evaluate several scenarios. A <em>welfarist firm</em> that values both profit and welfare should price closer to marginal cost, as efficiency gains outweigh distributional concerns. A <em>conservative firm</em> focused on labor-market stability should price above the profit-maximizing level in the short run, especially when its AI may displace low-income workers. Overall, socially minded firms face a trade-off between expanding access to AI and the resulting loss in profits and labor market risks.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"157 ","pages":"Article 103880"},"PeriodicalIF":4.1,"publicationDate":"2025-12-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145840017","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-17DOI: 10.1016/j.jmoneco.2025.103882
Olga Goldfayn-Frank , Pascal Kieren , Stefan Trautmann
Economists widely rely on measures of inflation expectations and uncertainty elicited via density forecasts. This approach, which asks respondents to assign probabilities to pre-specified ranges, has proven highly informative, but also faced criticism in recent periods of elevated and volatile inflation. We propose a new method to elicit the full distribution of inflation expectations, which is rooted in decision theory and can be implemented in standard surveys. In two large surveys and a laboratory experiment, we demonstrate that the proposed method leads to well-defined expectations that fulfil both subjective and objective quality criteria. The method is neither perceived as more difficult nor does it take more time to complete compared to the current standard. In contrast to density forecasts, the method is robust to differences in the state of the economy and thus allows comparisons across time and across countries. The method is portable and can be applied to elicit different macroeconomic expectations.
{"title":"A choice-based approach to the measurement of inflation expectations","authors":"Olga Goldfayn-Frank , Pascal Kieren , Stefan Trautmann","doi":"10.1016/j.jmoneco.2025.103882","DOIUrl":"10.1016/j.jmoneco.2025.103882","url":null,"abstract":"<div><div>Economists widely rely on measures of inflation expectations and uncertainty elicited via density forecasts. This approach, which asks respondents to assign probabilities to pre-specified ranges, has proven highly informative, but also faced criticism in recent periods of elevated and volatile inflation. We propose a new method to elicit the full distribution of inflation expectations, which is rooted in decision theory and can be implemented in standard surveys. In two large surveys and a laboratory experiment, we demonstrate that the proposed method leads to well-defined expectations that fulfil both subjective and objective quality criteria. The method is neither perceived as more difficult nor does it take more time to complete compared to the current standard. In contrast to density forecasts, the method is robust to differences in the state of the economy and thus allows comparisons across time and across countries. The method is portable and can be applied to elicit different macroeconomic expectations.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"157 ","pages":"Article 103882"},"PeriodicalIF":4.1,"publicationDate":"2025-12-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145840016","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-16DOI: 10.1016/j.jmoneco.2025.103881
Ming Zeng , Guihai Zhao
This paper develops a noisy-information equilibrium model to study how subjective expectations shape the joint dynamics of equity and bond yields. In our framework, movements in asset yields are driven by subjective expectations of dividend and GDP growth, rather than time-varying risk premia. A dual-component dividend structure, together with belief distortions, generates key asset-pricing facts: short-term equity yields are more volatile than long-term yields because short-run dividend growth expectations mean-revert to their stable long-run counterpart; the equity yield slope is procyclical due to countercyclical term structure of expected dividend growth; and the bond-stock correlation changes from positive to negative after the late 1990s, reflecting a shift in the correlation between expected GDP and dividend growth. The model also implies predictable dividend strip returns, with predictability declining with maturity due to dividend forecast revisions, and it successfully replicates the observed dynamics of equity yields and some aggregate moments.
{"title":"Expectation-driven term structure of equity and bond yields","authors":"Ming Zeng , Guihai Zhao","doi":"10.1016/j.jmoneco.2025.103881","DOIUrl":"10.1016/j.jmoneco.2025.103881","url":null,"abstract":"<div><div>This paper develops a noisy-information equilibrium model to study how subjective expectations shape the joint dynamics of equity and bond yields. In our framework, movements in asset yields are driven by subjective expectations of dividend and GDP growth, rather than time-varying risk premia. A dual-component dividend structure, together with belief distortions, generates key asset-pricing facts: short-term equity yields are more volatile than long-term yields because short-run dividend growth expectations mean-revert to their stable long-run counterpart; the equity yield slope is procyclical due to countercyclical term structure of expected dividend growth; and the bond-stock correlation changes from positive to negative after the late 1990s, reflecting a shift in the correlation between expected GDP and dividend growth. The model also implies predictable dividend strip returns, with predictability declining with maturity due to dividend forecast revisions, and it successfully replicates the observed dynamics of equity yields and some aggregate moments.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"157 ","pages":"Article 103881"},"PeriodicalIF":4.1,"publicationDate":"2025-12-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790280","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-12DOI: 10.1016/j.jmoneco.2025.103877
Boyan Jovanovic , Peter L. Rousseau
We model several ways in which AI may improve decisions, raise the productivity of firms, and raise human capital growth. Each focuses on activities that involve problem solving, with solutions being guided by signals. If AI raises the accuracy of the signals, humans will then make better decisions — individually and in groups.
{"title":"AI and task efficiency","authors":"Boyan Jovanovic , Peter L. Rousseau","doi":"10.1016/j.jmoneco.2025.103877","DOIUrl":"10.1016/j.jmoneco.2025.103877","url":null,"abstract":"<div><div>We model several ways in which AI may improve decisions, raise the productivity of firms, and raise human capital growth. Each focuses on activities that involve problem solving, with solutions being guided by signals. If AI raises the accuracy of the signals, humans will then make better decisions — individually and in groups.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"157 ","pages":"Article 103877"},"PeriodicalIF":4.1,"publicationDate":"2025-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145790382","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-11DOI: 10.1016/j.jmoneco.2025.103878
Roxana Mihet , Kumar Rishabh , Orlando Gomes
The technology revolution is transforming firm and industry dynamics, yet the roots of firm dominance in the modern economy remain unclear. Is industry dynamism driven by compute capabilities (AI), access to data, or the interaction between them? We develop a dynamic model in which firms gain knowledge from raw data using AI, but face “informational entropy”: without sufficient AI, more raw data leads to information overload and has negative returns. The model has two key predictions: (1) improvements in AI (compute) disproportionately benefit data-rich firms; and (2) access to processed data substitutes for compute, increasing industry dynamism and reducing market concentration. We confirm these predictions using novel data from 2000–2023 and two exogenous shocks: the 2006 launch of Amazon Web Services (AWS) and the 2017 introduction of transformer-based architectures. Our findings suggest that regulating data usability, not just AI models, is essential to preserving competition in the modern economy.
{"title":"Is it AI or data that drives firm market power?","authors":"Roxana Mihet , Kumar Rishabh , Orlando Gomes","doi":"10.1016/j.jmoneco.2025.103878","DOIUrl":"10.1016/j.jmoneco.2025.103878","url":null,"abstract":"<div><div>The technology revolution is transforming firm and industry dynamics, yet the roots of firm dominance in the modern economy remain unclear. Is industry dynamism driven by compute capabilities (AI), access to data, or the interaction between them? We develop a dynamic model in which firms gain knowledge from raw data using AI, but face <em>“informational entropy”</em>: without sufficient AI, more raw data leads to information overload and has negative returns. The model has two key predictions: (1) improvements in AI (compute) disproportionately benefit data-rich firms; and (2) access to processed data substitutes for compute, increasing industry dynamism and reducing market concentration. We confirm these predictions using novel data from 2000–2023 and two exogenous shocks: the 2006 launch of Amazon Web Services (AWS) and the 2017 introduction of transformer-based architectures. Our findings suggest that regulating data usability, not just AI models, is essential to preserving competition in the modern economy.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"157 ","pages":"Article 103878"},"PeriodicalIF":4.1,"publicationDate":"2025-12-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737780","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-10DOI: 10.1016/j.jmoneco.2025.103879
Haishi Li
Using a new database on global multinational production (MP), I document that world multinational enterprise (MNE) sales declined as sharply as trade during the Great Recession (2008–2009). This collapse was driven by MNEs from a few key headquarters countries and associated with steeper GDP declines in MP-intensive countries. MNEs amplified the trade collapse because their overall sales fell while they maintained higher trade intensity than domestic firms. In a calibrated quantitative model with flexible vertical and horizontal MNE structures, international trade, and input–output linkages, I show that productivity shocks, which disproportionately affected trade-intensive MNEs, contributed more to the trade collapse than demand shocks. MNEs’ productivity shocks accounted for over half of the global GDP decline during the Great Recession. MP linkages significantly amplified the transmission of headquarters-country productivity shocks to global GDP, MP, and trade.
{"title":"Multinational production and global shock propagation during the great recession","authors":"Haishi Li","doi":"10.1016/j.jmoneco.2025.103879","DOIUrl":"10.1016/j.jmoneco.2025.103879","url":null,"abstract":"<div><div>Using a new database on global multinational production (MP), I document that world multinational enterprise (MNE) sales declined as sharply as trade during the Great Recession (2008–2009). This collapse was driven by MNEs from a few key headquarters countries and associated with steeper GDP declines in MP-intensive countries. MNEs amplified the trade collapse because their overall sales fell while they maintained higher trade intensity than domestic firms. In a calibrated quantitative model with flexible vertical and horizontal MNE structures, international trade, and input–output linkages, I show that productivity shocks, which disproportionately affected trade-intensive MNEs, contributed more to the trade collapse than demand shocks. MNEs’ productivity shocks accounted for over half of the global GDP decline during the Great Recession. MP linkages significantly amplified the transmission of headquarters-country productivity shocks to global GDP, MP, and trade.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"157 ","pages":"Article 103879"},"PeriodicalIF":4.1,"publicationDate":"2025-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145737779","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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