Research

Work in progress

Recessionary Wage Flexibility in a Monetary Union - A TANK Approach with Michal Kobielarz

We study the impact of wage flexibility on the transmission of economic shocks within a monetary union using a two-agent New-Keynesian small open economy model. Our analysis reveals that financially constrained households amplify the real income channel, leading to greater shock amplification when price flexibility is insufficient. The required degree of price flexibility depends on trade openness and the share of constrained households, but not on wage flexibility itself. These findings challenge the conventional wisdom regarding the benefits of wage flexibility in a monetary union.

Unemployment-Risk Differences in the EMU: The Role of Monetary Policy with Moritz Scheidenberger

This research investigates how varying unemployment risks across Eurozone labor markets amplify economic shocks. When some countries face higher unemployment risk, it triggers demand drops that worsen recessions. We evaluate if existing financial integration and trade mechanisms can absorb these risks, or reliance on emergency programs like SURE is needed.

Net Gains or Net Pains? - Safety Nets and Precautionary Savings in a Currency Union