Jón Steinsson
http://www.people.fas.harvard.edu/~steinss/
steinss@fas.harvard.edu
HARVARD UNIVERSITY
Placement Director: Claudia Goldin
Graduate Student Coordinator: Nicole Tateosian
CGOLDIN@HARVARD.EDU
NATATEOS@FAS.HARVARD.EDU
617-495-3934
617-495-8927
Home Contact Information
1 Langdon St. #32
Cambridge, MA 02138
Office Contact Information
Department of Economics
Harvard University
Littauer Center
Cambridge, MA 02138
Home: 617 492 4530
Cell: 857 919 3675
Personal Information: Icelandic citizen
Undergraduate Studies:
AB, Economics, Princeton University, Summa Cum Laude, 2000
Wolf Balleisen Memorial Prize for best undergraduate thesis in economics
Graduate Studies:
Harvard University, 2001 to present
Thesis Title: “Prices and Exchange Rates in General Equilibrium”
Expected Completion Date: June 2007
Thesis Committee and References:
Professor Kenneth Rogoff
Department of Economics
617-496-0062
krogoff@harvard.edu
Professor Robert Barro
Department of Economics
617-495-3203
rbarro@harvard.edu
Professor Alberto Alesina
Department of Economics
617-495-5077
aalesina@harvard.edu
Professor N. Gregory Mankiw
Department of Economics
617-495-4301
ngmankiw@harvard.edu
Teaching and Research Fields:
Macroeconomics, International Economics
Teaching Experience:
Fall, 2003
QR 43, Teaching Fellow for Professor John Campbell
Fall, 2003-2005
Mathcamp for Economics Graduate Students, Instructor.
Research Experience and Other Employment:
Spring, 2006
Board of Governors of the Federal Reserve System, Dissertation Intern.
2000-2001
Central Bank of Iceland, Economist.
Professional Activities:
Presentations: Harvard, MIT, Columbia, NYU, Federal Reserve Board, NY Fed, Boston University,
Boston College, CEPR ESSIM Conference, Cleveland Fed/Bank of Canada/Swiss
National Bank Annual Conference, NBER Monetary Economics Meeting.
Referee:
American Economic Review, Quarterly Journal of Economics, B.E. Journals in
Macroeconomics, Economic Inquiry, Economic Journal, Economics of Transition,
European Economic Review, Journal of Economic Dynamics and Control, Journal
of Macroeconomics, Journal of Money Credit and Banking, Macroeconomic
Dynamics and Oxford Economic Papers.
Honors, Scholarships, and Fellowships:
2006-2007
Bradley Fellowship, Harvard University
2005-2006
Knafel Fellowship, Harvard University
2003-2005
Graduate Fellowship, The Icelandic Research Fund for Graduate Students
2001-2003
Graduate Fellowship, Harvard University
Publications:
Optimal Monetary Policy in an Economy with Inflation Persistence, Journal of Monetary Economics,
50: 1425-1456, October 2003.
Research Papers:
“Monetary Non-Neutrality in a Multi-Sector Menu Cost Model” (Primary Job Market Paper)
(with Emi Nakamura)
We calibrate a multi-sector menu cost model using new evidence on the cross-sectional distribution of
the frequency and size of price changes in the U.S. economy. The degree of monetary non-neutrality
implied by this multi-sector model is triple that implied by a one-sector model calibrated to the mean
frequency of price change of all firms. Our model incorporates intermediate inputs. This feature
generates a substantial amount of real rigidity, which also roughly triples the degree of monetary nonneutrality in the model without affecting the size of price changes. The model with intermediate inputs
also generates positive comovement of output of different sectors, unlike a model with no real rigidities.
We compare our menu cost model to an extension of the Calvo model that is able to match the large size
of price changes observed in the data.
“Five Facts About Prices: A Reevaluation of Menu Cost Models” (Secondary Job Market Paper)
(with Emi Nakamura)
We establish five facts about prices in the U.S. economy: 1) The median implied duration of consumer
prices when sales are excluded at the product level is between 8 and 11 months. The median implied
duration of finished goods producer prices is 8.7 months. 2) One-third of regular price changes are price
decreases. 3) The frequency of price increases responds strongly to inflation while the frequency of price
decreases and the size of price increases and price decreases do not. 4) The frequency of price change is
highly seasonal: It is highest in the 1st quarter and lowest in the 4th quarter. 5) The hazard function of
price changes for individual consumer and producer goods is downward sloping for the first few months
and then flat (except for a large spike at 12 months in consumer services and all producer prices). These
facts are based on CPI microdata and a new comprehensive data set of microdata on producer prices that
we construct from raw production files underlying the PPI. We show that the 1st, 2nd and 3rd facts are
consistent with a benchmark menu-cost model, while the 4th and 5th facts are not.
“The Dynamic Behavior of Real Exchange Rates in Sticky Price Models”
Empirical evidence suggests that real exchange rates exhibit hump-shaped dynamics. This fact can
explain why existing sticky-price business cycle models have been unable to match the persistence of
the real exchange rate. The key failure of existing models is that they yield monotonic impulse responses
for the real exchange rate. It is extremely difficult for models that have this feature to match the
empirical persistence of the real exchange rate. I present a two-country sticky-price business cycle
model that yields a hump-shaped response for the real exchange rate in response to a number of different
disturbances. The hump-shaped dynamics generated by the model are a powerful source of endogenous
persistence that allows the model to match the long half-life of the real exchange rate.
“Price Setting in Forward-Looking Customer Markets”
(with Emi Nakamura)
We propose a new explanation for price rigidity. If consumers form habits in individual goods, then
firms face a time-inconsistency problem. The consumers' habits imply that low prices in the future help
attract customers in the present. Firms would therefore like to promise low prices in the future. But when
the future arrives they have an incentive to exploit consumers' habits and price gouge. In this model,
unlike the standard no-habit model, price rigidity is an equilibrium outcome. Equilibrium price rigidity
can be sustained because rigid prices help firms overcome the time-inconsistency problem. If consumers
have incomplete information about firms' desired prices, the firm-preferred equilibrium has the firm
price at or below a ``price cap''. Our model therefore provides an explanation for the simultaneous
existence of a rigid regular price and frequent sales, a pattern that is difficult to reconcile with existing
models of price rigidity. Our model also explains why firms fear adverse reactions to price changes, why
sales prices are more flexible than regular prices and why firms make explicit promises not to change
prices.
Work in Progress:
“Learning and the Long Rate” (with Gopi Goswami and Emi Nakamura)