Our team studies a broad range of macroeconomic phenomena that are relevant for policymakers. The focus of our research centers around the role of monetary policy in stabilizing the economy, i.e., in smoothing business cycle fluctuations. In this vein, we aim to sharpen our understanding of how monetary policy can improve the functioning of the economy by controlling short/long-term interest rates as well as expectations of economic agents - with the ultimate objective of ensuring price stability.
Among others, we empirically study how central banks have historically reacted to disruptions in the financial system, in the housing market, or in global commodity markets and which lessons can be drawn for the future to improve economic outcomes and to prevent financial and economic crises.
Moreover, we analyze the international repercussions of domestic monetary policy actions; that is, we pay particular attention to the questions of how monetary policy drives foreign exchange rate movements or how it influences cross-border capital flows.
In a very recent strand of our research agenda, we further scrutinize the challenges and novel trade-offs that climate change may pose for central banks. For instance, we quantify (i) how increased variability in weather conditions affects global food production and thus food commodity prices, (ii) whether these price movements spill over to other commodities such as crude oil or industrial metals, (iii) how these commodity market shocks influence the global business cycle and consumer prices, and (iv) how monetary policy has reacted to such developments.
Our research is empirical and quantitative in nature thus providing the foundation for what is nowadays called “evidence-based” policy advice. Typically, we use econometric techniques such as time-series or panel-data models to uncover causal relations between macroeconomic and/or financial market data. More specifically, we employ Vector-Autoregressions, Local-Projections techniques, or Dynamic Stochastic General Equilibrium approaches to model structural relations in the economy. In recent work, we increasingly make use of survey data of households and firms as well as of other microeconomic data such as financial statements of firms.
For an overview of publications or recent working papers of our team, please click here.