Walk on the Wild Side: Temporarily Unstable Paths and Multiplicative Sunspots (with Guido Ascari and Hedibert F. Lopes), American Economic Review, 2019, 109 (5): 1805-42.
WP-version – (Previously circulated as Rational Sunspots)

Abstract: We propose a generalization of the rational expectations framework to allow for multiplicative sunspot shocks and temporarily unstable paths. Then, we provide an econometric strategy to estimate this generalized model on the data. Our approach yields drifting parameters and stochastic volatility. The methodology allows the data to choose between different possible alternatives: determinacy, indeterminacy and temporary instability. We apply our methodology to US inflation dynamics in the ‘70s through the lens of a simple New Keynesian model. When temporarily unstable paths are allowed, the data unambiguously select them to explain the stagflation period in the ‘70s.


Traditional and New Keynesian Dynamic Models for Potential Output and Inflation Rate, Rivista di Politica Economica, 2009, vol. 99(4). Winner of the 13th edition of the Angelo Costa Award.

Abstract: This paper uses the Kalman filter to estimate potential output as a latent process. We estimate two Dynamic Linear Models, comparing the results obtained through a traditional and a New Keynesian model. We verify that the traditional measures of output gap, even if usually applied in the estimation of the New Keynesian Phillips curve, are not consistent with the theory. We propose a New Keynesian measure that overcomes this limit. We suggest it as an alternative to the use of marginal costs.


… in progress …

“Re-assessing monetary policy shocks in China”, (with A. Dieppe and B. van Roye)
“On the Sources of Business Cycle Fluctuations in Small Open Economies: Sweden 1995–2015”, (with V. Corbo and J. Lindé)
“Detecting Liquidity Traps”, (with Y. Akkaya and I. Strid). Presentation at ISBA 2018
“Private Beliefs Formation and Macroeconomic Risk”, (with G. Ascari and L. Melosi)
“Fear of Secular Stagnation and the Natural Interest Rate”, (with V. Gavazza)



ISBA World Meeting, Edinburgh, 2018
Workshop on Nonlinear Models in Macroeconomics and Finance for an Unstable World, Oslo, 2018
Time-varying models for monetary policy and financial stability, Florence (EUI), 2017
Glasgow University, February 2017
Inflation: Drivers and Dynamics Conference, Cleveland, 2016
EEA-ESEM Conference, Geneva, 2016
NBER Summer Institute, Boston, 2016 (presentation made by a co-author)
International Association for Applied Econometrics, Milan, 2016
Barcelona GSE Summer Forum (TSE) , Barcelona, 2016
RCEA Bayesian Econometric Workshop, Rimini, 2016
Italian Congress of Econometrics and Empirical Economics, Genova, 2013.
European Seminar on Bayesian Econometrics, Vienna, 2012.
Società Italiana degli Economisti, Annual Conference, Matera, 2012.
Society for Economic Dynamics Annual Meeting, Limassol, 2012.
The Royal Economic Society Annual Conference, Cambridge, 2012.