Basil Halperin

Research — Basil Halperin


Job market paper

Optimal monetary policy under menu costs (with Daniele Caratelli)
[new version coming soon]

We analytically characterize optimal monetary policy in a multisector economy with menu costs, and show that it “looks through” sectoral shocks even when they affect inflation. In a baseline parameterization, optimal policy stabilizes nominal wages. This nominal wage targeting contrasts with inflation targeting, the optimal policy prescribed by the textbook New Keynesian model in which firms are permitted to adjust their prices only randomly and exogenously. More generally, under menu costs, inflation and output should move inversely: following negative shocks, inflation should be allowed to rise. The key intuition is that, unlike the optimal policy, stabilizing inflation causes shocks to spill over across sectors, needlessly increasing the number of firms that must pay the fixed cost of price adjustment. Finally, we show in a rich quantitative model that moving from inflation to nominal wage targeting reduces the welfare loss from menu costs.


Competing fiat moneys and nominal rigidities (with Adam Baybutt and J. Zachary Mazlish) [draft coming soon]

▸ Abstract

The ZLB is NBD: 5 theses on the New Keynesian “liquidity trap” [draft coming soon]

▸ Abstract

Transformative AI, existential risk, and asset pricing (with Trevor Chow and J. Zachary Mazlish) [draft coming soon]

▸ Abstract

Toward an understanding of the economics of apologies: evidence from a large-scale natural field experiment (with Ben Ho, John A. List, and Ian Muir)

The Economic Journal (2022)

[publisher’s version]; [slides]; [Twitter thread]

▸ Abstract

In progress

Experimentally reducing menu costs: evidence from one of the world’s largest retailers (with Daniele Caratelli)

Decomposing the Great Stagnation: Baumol’s cost disease vs. “ideas are getting harder to find” (with J. Zachary Mazlish)

Inelastic markets in the short run, elastic markets in the long run (with J. Zachary Mazlish)

Older work

Monetary Misperceptions: Optimal monetary policy under incomplete information (2017)

▸ Abstract