Working Paper:

• Misperceived Law of Motion in Macroeconomic Expectations (slides)

​            - I develop a method to detect belief distortions in Linear–Gaussian settings. When perceived and actual laws of motion coincide, the cross-covariance between forecasts and realizations is symmetric. Models with information rigidity, overconfidence, diagnostic expectations, or imperfect memory preserve this symmetry, whereas extrapolation, cognitive discounting, oversimplified learning, and level-k reasoning generate asymmetric patterns. Applying the method to expectations survey data, I uncover systematic asymmetries consistent with extrapolative beliefs and cognitive discounting.​ 
             Funded by CityU Start-up Grant 7200696 (by June 2024, HKD 400,000)​

• Monetary Policy in Open Economies with Production Networks (slides)
  (with Yicheng Wang, Le Xu, and Francesco Zanetti), R&R at JME (resubmitted)

             - We derive an index that links sectoral inflation to the output gap. We show that the link is stronger in sectors that are more important suppliers of domestic intermediate inputs and whose associated domestic labor income is more exposed to cross-border expenditure switching. Accordingly, monetary policy that stabilizes the output gap can be implemented by stabilizing the corresponding inflation index.
             Funded by ​RGC-GRF 1150823 (by Dec 2025, HKD 470,583)​​​

• Procyclical Productivity in New Keynesian Models
  ​(with José-Víctor Ríos-Rull), R&R at REStud (resubmitted by Dec 31)

             - We show that the positive comovement between profit margins and capacity utilization is rationalized by a product-market search friction. Merchants with high demand attract more customers and raise occupancy, generating comovement in demand, productivity, and margins. This mechanism is disciplined using Compustat data and a shift–share instrument for demand, and externally validated through direct occupancy evidence and differential patterns across perishable versus storable sectors. Quantitatively, the framework requires smaller productivity shocks, rationalizes countercyclical labor shares and procyclical consumption under IST shocks, produces acyclical markups, and implies a flattening of the Phillips curve.

• Level-k DSGE and Monetary Policy, updated soon.

             - Lower-order beliefs match consumer expectations and generate repeated boom-bust cycles.

• Rehypothecation and Intermediary Leverage

             - Broker-dealer leverage relies on a moderate level of adverse selection in collateral quality.

Work in Progress:​

• ​The Entrepreneur Channel of Monetary Policy Transmission (with Yicheng Wang)

             ​- Entrepreneurs bear and transmit a large proportion of aggregate risks.
             Funded by RGC-ECS 21501720 (by June 2024, HKD 543,900)

• Service Inflation and Missing Pass-Through (slides) (with Yicheng Wang and Le Xu)

             - Service industries have lower price pass-through on top of lower price rigidities.

• Industry Heterogeneity, Production Networks, and Monetary Policy (slides) (with Jianhong Xin and Le Xu)

             ​- Estimate a model with production networks to match sectoral impulse responses.
             Funded by CityU-SRG 7005374 (Sep 2019-Feb 2022, HKD 100,000)

Early Publications

• 2013. “Housing and Saving with Finance Imperfection”, Annals of Economics and Finance 14(1): 207-248. (with Yanbin Chen and Fangxing Li)

           - Housing demand increases the saving rate when home equity withdrawal is limited.

• ​2013. “The Impact of China’s Inflation on Wealth Inequality”, Economic Research Journal (经济研究) 48(8): 4-15. (with Yanbin Chen, Jun Chen, and Weize Chen)
• 2011. “How does Housing Price Affect Household Saving Rate and Wealth Inequality?”, Economic Research Journal (经济研究), 46(10): 25-38. (with Yanbin Chen)
• 2010. “Advance in Macroeconomics: Bewley Model”, Economic Research Journal (经济研究), 45(7): 141-151. (with Yanbin Chen and Fangxing Li)

Discussion

• A High-frequency Measure of Chinese Monetary Policy Shocks (slides)