Research
Fiscal Narratives and Inflation (with Sarah Arndt) - Job Market Paper
Abstract: This paper investigates how media narratives on fiscal policy shape household’s inflation expectations. We collect a large corpus of newspaper articles report- ing on fiscal policy from four major German newspapers spanning from 2006 to March 2025. Using a large language model (ChatGPT) we introduce a strategy to automatically identify different fiscal narratives in text and construct narrative indices out of this data. We then estimate the effect of these narrative indices on household inflation expectations and find that they all have a positive significant effect varying in size. Lastly, we measure how fiscal narratives affect the trans- mission of a government spending shock to the economy and find that some of the narratives have an amplifying effect while others dampen the impact.
Presentations: ECONDAT 2026 Spring meeting • 2026 ifo Dresden Workshop on Macroeconomics and International Finance • 33rd Symposium of the Society for Nonlinear Dynamics & Econometrics 2026 • Women in Central Banking 2025 • 15th ifo Conference on Macroeconomics and Survey Data 2025 (Poster) • 7th Behavioral Macroeconomics Workshop 2025 (Poster)
Domestic Revenue Mobilization in Low-Income Countries (with John-Paul Fanning and Thomas Augsten)
Status: Draft
Abstract: This paper investigates the effect of domestic revenue mobilization on economic growth, for a sample of 65 low income countries (LIC) over the period 1990-2019. Using local projection methods with the Arellano-Bond estimator, we analyze the impact of tax revenue increases on real GDP per capita growth and examine the transmission channels through consumption and investment. Our results suggest that a one percentage point increase in the tax-to-GDP ratio positively affects real GDP per capita growth on impact, with effects remaining statistically significant through the second year. The growth effects operate primarily through increased private consumption, while public and private investment show no significant response. These findings indicate that revenue mobilization in LICs works through consumption and confidence channels rather than investment channels, suggesting a missed opportunity to use additional fiscal resources for productivity-enhancing public investment that could support sustainable long-term growth.
Tariff Attention and Inflation Expectations: Evidence from Financial Markets (with Vandana Ramakrishnan)
Abstract: We study how tariff-attention shocks affect market-based inflation compensation in the United States. Using a Bloomberg tariff-news index to measure attention to trade policy, we estimate daily local projections of TIPS breakeven inflation rates and inflation swaps at maturities from one to thirty years over July 2018 to January 2026. The market response to tariff news reverses sign between the two Trump trade wars. In the full sample, a one-standard-deviation shock is followed by modest declines in both measures, concentrated at short maturities and consistent with a risk-off, growth-negative channel rather than pure cost-push inflation. This average masks sharp heterogeneity, however. In the first trade war (2018–2019), breakevens and swaps fall broadly across maturities. In the second (2025), inflation swaps rise across the curve significantly from the two- to the twenty-year maturity while breakevens decouple, falling at the short end but turning positive at longer horizons. Because swaps are not exposed to the TIPS liquidity premium, this short-end divergence between the two instruments isolates a flight-to-liquidity effect and identifies swaps as the cleaner gauge. These results suggest that markets may have assigned greater weight to persistent tariff-driven pressures during the second episode.assigned greater weight to persistent tariff-driven price pressures during the second episode.
Traders and the Fed: The case of Polymarket (with Basil Jan)
Status: Draft
Abstract: We exploit transaction-level data from Polymarket — the world’s largest decentralized prediction market — to construct real-time, individual-level distributions of monetary policy expectations and to study how trader heterogeneity shapes both price formation and the transmission of policy information. Our sample comprises 307,080 unique wallets active in Federal Reserve policy markets over the period May 2024 to December 2025. The paper pursues two objectives. First, we characterize heterogeneity in market participation. We document systematic differences in the behavior of whale, large, and small traders around policy announcements, and identify which trader types exert the greatest price impact. High-volume traders predominantly supply liquidity, while smaller traders exhibit faster and more directional responses to new information. Second, we examine how pre-announcement expectation structure mediates the transmission of monetary policy surprises to financial markets. When non-mechanical traders enter the announcement window with more divergent positions, yield responses to a given FOMC surprise are substantially larger. Moving from low to high pre-announcement disagreement roughly doubles yield sensitivity, an effect that stems from differences between trader groups rather than from within-group dispersion.
Presentations: Augustin Cournot Doctoral Days 2026
Which Macroeconomic Releases Move FOMC Prediction Markets? Evidence from Polymarket (with Basil Jan)
Status: Draft
Abstract: We use 3.5 million trades on 69 Polymarket contracts for Federal Reserve rate decisions covering 16 FOMC meeting cycles (May 2024–December 2025) to measure how macroeconomic announcements shift market-implied probabilities of specific rate outcomes. Linking trade-level data to 15 macro series, CPI, PCE, and NFP releases each move contract prices by approximately one percentage point within 60 minutes—roughly twice the response to FOMC rate decisions, which are partially pre-priced. About 60 percent of the 24-hour price adjustment completes within one hour. Price impacts are amplified when pre-release market uncertainty is high, consistent with Bayesian updating.
The Denied Bailout: The Effect on Berlin’s Fiscal Policy (with Alfons J. Weichenrieder)
Status: Draft
Work in Progress
Bank Responses to Windfall Taxes- A European Natural Experiment (with Basil Jan)
Status: work in progress
From Bundestag to Economic Expectations: When Politicians Talk, Markets Listen Evidence from German Parliamentary Discourse (with Basil Jan)
Status: work in progress