Understanding how policy and institutions shape macroeconomic outcomes is a top priority in policy and academic research agendas. A long-standing tradition in macro-econometrics has focused on aggregate data from national statistics and linear models to evaluate the effects of monetary and fiscal policies on consumption, employment, income, interest rates and output.
The financial crisis of 2007-2009, developments in computational power and, most importantly, availability of micro data have challenged this tradition in at least two very significant dimensions. First, uncertainty, volatility and risk have been appreciated as playing a very significant role in households’ and firms’ individual decisions, in a way that cannot (and should not) be easily dismissed when analyzing macroeconomic dynamics. Second, changes in monetary policy, government spending, taxes, fiscal consolidation and institutions could engineer a (potentially unintended) redistribution of resources across society, in a way that may also impact, indirectly, on the same endogenous variables they were meant to stabilize.
The main goal of this research is to identify and evaluate the channels through which economic policies and institutional reforms affect macroeconomic outcomes through their impact on households and firms behaviour at the micro level. The analyses provide an unprecedented quantification of the contribution of popular monetary and fiscal interventions to the uncertainty surrounding the resources available to households, to the volatility of real activity and financial markets (and the mortgage market in particular) and to income and consumption inequality.
