Macro Seminar - Elisa Rubbo, Chicago Booth


Location: 3060F Jenkins Nanovic Halls

Chicago Booth Elisa Rubbo
Elisa Rubbo, Chicago Booth

Presentation Title: Monetary Non-Neutrality in the Cross-Section



This paper models the cross sectional effects of monetary policy on the employment and consumption ofheterogeneous households, who earn and spend their income in different industries, and face different wagerigidity and labor supply elasticity. Industries in turn hire different bundles of worker types and capital assets,and face heterogeneous price rigidity and demand elasticity. In response to a monetary expansion, relative pricesdecline and hence relative demand increases for the goods that have stickier prices or use supply-elastic factors(or whose inputs have sticky prices or use supply-elastic factors...), thereby increasing the relative employment ofthe workers who produce them. In the aggregate, the ability of producers and consumers to substitute towardssticky-price or supply-elastic goods increases monetary non-neutrality. Calibrating the model to the US economyreveals significant heterogeneity in the impact response of employment to monetary policy across occupations,varying from0.25%(food services) to1.1%(construction) for a1%increase in nominal GDP. Ignoring input-output linkages would reduce this cross-sectional range from0.86%to0.35%.

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