Choongryul Yang

I am a Senior Economist at the Federal Reserve Board of Governors.

My research focuses on macroeconomic topics, including monetary and fiscal policy, expectations formation, and business cycle fluctuations.

For more information please contact me at: or

Published Papers

Quantitative Economics, July 2023, Vol. 14, Issue 3, 817–853. [Link]

Joint work with Saroj Bhattarai and Jae Won Lee

, Other versions: [FEDS 2021-13R], [CAMA WP 107/2020], [CESifo WP No. 8779]

We show that the effectiveness of redistribution policy is tied to how much inflation it generates, and thereby, to monetary-fiscal adjustments that ultimately finance the transfers. In the monetary regime, taxes increase to finance transfers while in the fiscal regime, inflation rises, imposing inflation taxes on public debt holders. We show analytically that the fiscal regime generates larger and more persistent inflation than the monetary regime. In a two-sector model, we quantify the effects of the CARES Act in a COVID recession. We find that transfer multipliers are larger, and that moreover, redistribution is Pareto improving, under the fiscal regime.

Journal of Monetary Economics, May 2022, Vol. 128, 105–123. [Link]

Winner of the 2020 Society for Computational Economics Student Prize

, Local file: [Draft]

Using a New Zealand firm-level survey, I show that firms producing more goods have both better information about inflation and more frequent but smaller price changes. To explain these empirical findings, I develop a general equilibrium menu cost model with rationally inattentive multi-product firms. I show that the interaction of nominal and informational rigidities leads to a new selection effect: price adjusters are better informed than non-adjusters. This selection endogenously generates a leptokurtic distribution of desired price changes, which amplifies monetary non-neutrality. Compared to a one-product baseline, the real effects of monetary shocks are 12% smaller in a two-product model.

Journal of Monetary Economics, April 2021, Vol. 119, 40–57. [Link]

Joint work with Saroj Bhattarai and Felipe Schwartzman

, Other version: [FRB Richmond WP 19-07R]

The 2006-09 US housing crisis had scarring local effects. For a given county, a housing shock generating a 10% reduction in housing wealth from 2006 through 2009 led to a 4.4% decline in employment by 2018 and a commensurate decline in value added. This persistent local effect occurred despite the shock having no significant impact on labor productivity. The local labor market adjustment to the housing shock was particularly costly: local wages did not respond, and long-run convergence in the local labor market slack instead took place entirely through population losses in affected regions. Moreover, the 2002-06 housing boom does not generate significant employment gains, indicating that the employment losses relative to 2006 are also losses relative to the counterfactual case in which there was no housing cycle.

Working Papers

Joint work with Hyunseung Oh and Chamna Yoon

This version: 2023/11. [Draft] [Online Appendix]

We analyze a data set of U.S. residential land development for completed sub-divisions between 2003 and 2019 and show that (i) time-to-develop (TTD) is about three years, on average, and (ii) TTD is highly dispersed across regions. By formulating a link between TTD and housing supply elasticities, we then quantify the implied short- to medium-run housing supply elasticities across major counties. These elasticities improve on the long-run housing supply elasticity in accounting for several business cycle properties of the housing market. In particular, we generate a positive cross-regional correlation between house prices and housing supply conditional on a demand shock, because developers in the region with a higher long-run supply elasticity are more likely to substitute short-run supply with long-run supply as they internalize the larger gap between the short- and long-run supply elasticities.

Joint work with Hie Joo Ahn and Shihan Xie

Revision Requested, This version: 2022/09. [Draft]

, Other version: [FEDS 2022-65]

We study the role of homeownership in the effectiveness of monetary policy on households' expectations. Empirically, we find that homeowners revise down their near-term inflation expectations and their optimism about future labor market conditions in response to a rise in mortgage rates, while renters are less likely to do so. We further show that the monetarypolicy component of mortgage-rate changes creates the difference in expectation revisions between homeowners andrenters. This result suggests that homeowners are attentive to news on interest rates and adjust their expectations accordingly in a manner consistent with the intended effect of monetary policy. We characterize these findings using a rational inattention model with two types of households-homeowners and renters.

Joint work with Hassan Afrouzi

This version: 2021/04. [Draft]

Evidence on firms’ expectations shows that while firms are on average uninformed about their economic environment, there is a significant amount of heterogeneity in the accuracy of their forecasts about aggregate variables and their subjective uncertainty about their own desired price changes. The natural question that follows is whose expectations matter for macroeconomic outcomes? Using data on firms’ expectations, we find there is selection in information acquisition: firms that have changed their price more recently tend to have more accurate forecasts and more certain posteriors. Comparing two models with different types of information acquisition costs, we find this evidence consistent with state-dependent information acquisition where firms only acquire information when making decisions and abstain from it otherwise. Deriving a sufficient statistic for monetary non-neutrality under state-dependent information acquisition, we find that only the most informed firms’ subjective uncertainty matter for the response of output to monetary shocks.

Joint work with Hassan Afrouzi

--- Documentation: [HTML], [PDF]

--- Packages for Solving Dynamic Rational Inattention Problems: [Julia], [Matlab]

--- An Interactive Set of Jupyter Notebooks in Julia Dynamic RI

Revision Requested, This version: 2020/12. [Draft]

, Other version: [CESifo WP No. 8840]

We develop a fast, tractable, and robust method for solving the transition path of dynamic rational inattention problems in linear-quadratic-Gaussian settings. As an application of our general framework, we develop an attention-driven theory of dynamic pricing in which the Phillips curve slope is endogenous to systematic aspects of monetary policy. In our model, when the monetary authority is more committed to stabilizing nominal variables, rationally inattentive firms pay less attention to changes in their input costs, which leads to a flatter Phillips curve and more anchored inflation expectations. This effect, however, is not symmetric. A more dovish monetary policy flattens the Phillips curve in the short-run but generates a steeper Phillips curve in the long-run. In a calibrated version of our general equilibrium model, we find that our mechanism quantifies a 75% decline in the slope of the Phillips curve in the post-Volcker period, relative to the period before it.

Joint work with Saroj Bhattarai, Jae Won Lee, and Woong Yong Park

This version: 2022/05. [Draft]

, Other versions: [FEDS 2022-27], [FRB Dallas Global Institute WP 391], [CESifo WP No. 7630]

We study aggregate, distributional, and welfare effects of a permanent reduction in the capital tax rate in a dynamic equilibrium model with capital-skill complementarity. Such a tax reform leads to expansionary long-run aggregate effects but is coupled with an increase in the skill premium. Moreover, the expansionary long-run aggregate effects are smaller when distortionary labor or consumption tax rates have to increase to finance the capital tax rate cut. An extension to a model with heterogeneous households shows that consumption inequality increases in the long-run. We study transition dynamics and show that short-run effects depend critically on the monetary policy response: whether the central bank allows inflation to directly facilitate government debt stabilization and how inertially it raises interest rates. Finally, we contrast the long-term aggregate welfare gains with short-term losses and show that welfare gains for the skilled go together with welfare losses for the unskilled.

Work in Progress