Papers and Publications

Journal Publications

Out of Bounds: Do SPF Respondents Have Anchored Inflation Expectations? (2023, with Carola Binder and Randal J. Verbrugge) Journal of Money Credit & Banking, 55(2-3), 559-576

Diversification and Stability in Illinois Local Government Revenues (2023, with Justin Marlowe)
Illinois Municipal Policy Journal, 8(1), 61-80

Policy Papers

Forward Guidance during the Pandemic: Has It Changed the Public’s Expectations? (2020, with Chengcheng Jia) Federal Reserve Bank of Cleveland Economic Commentary

The Information Effect of Monetary Policy: Self-Defeating or Optimal? (2020, with Chengcheng Jia) Federal Reserve Bank of Cleveland Economic Commentary

The CPI–PCEPI Inflation Differential: Causes and Prospects (2020, with Carola Binder and Randal J. Verbrugge) Federal Reserve Bank of Cleveland Economic Commentary

Risk-taking by Public Pension Funds. (2018, with Kurt Winkelmann, Jordan Pandolfo, and Matthew Murphy) Heller-Hurwicz Economics Institute Policy Brief

Works In Progress

Portfolio Theory and Municipal Revenue: Service Structures and Risk Asymmetry (In Progress, with Justin Marlowe, Nathan Grasse, and Elizabeth Searing)
Summary: Municipal governments rely on revenue management to fund service provisions, and conventional wisdom suggests that diversification is beneficial. Although the Hirschman-Herfindahl Index (HHI) is commonly used to measure municipal revenue diversification (concentration), it overlooks key characteristics such as growth, risk, and covariance that underpin the rationale for diversification based on modern portfolio theory (MPT) (Markowitz, 1952; Janson and Marlowe, 2023). Scholars have applied MPT to government and municipal revenue portfolios (White, 1979; White and Chou, 1980; Berg, Marlin, and Heydarpour, 2000; Harmon and Mallick, 1994); this paper extends that work using financial data from Minnesota municipalities (2003–2022). We identify optimal portfolios through mean-variance and mean semivariance analysis, offering insights into the importance of risk measurement—particularly risk asymmetry—and how municipal service profiles can shape efficient revenue structures. This demonstrates the importance of the definition of risk, which impacts the composition of portfolios, the level of possible return, and the diversification identified as theoretically ideal. Our results have wide-ranging implications from local government administration to evaluation in municipal bond markets.

Improving Inference via Data-Based Identification of Unobserved Variables and Unusual Data Points (In Progress, with Randal J. Verbrugge)
Abstract: Omitted variable bias is well-known problem that, if the variable is not present in a data set, seems impossible to discover. But two other problems are equally damaging and underappreciated: most classical estimators are highly fragile (their asymptotic distributions diverge with modest contamination) and have low breakdown points (the estimate can be totally spoiled by a miniscule percentage of unusual data). None of these threats disappear asymptotically; none is easy to detect in large, multivariate data; all of them compromise inference. Herein we show how, in some cases, one may use the data at hand (only) to detect the presence of an omitted variable: by locating sets of points that appear to come from a different data-generating mechanism. Their detection can lead to deep insights into the data-generating mechanism. We provide some salient examples.