Choongryul Yang

Department of Economics
University of Texas at Austin
2225 Speedway C3100
Austin, TX 78712

I am a Ph.D. in economics at the University of Texas at Austin.

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

For more information please see my CV or contact me at:

Working Papers

This version: 2019/11. [Draft].

How does the number of products sold by a firm affect its decisions regarding price setting and information acquisition? Using a firm-level survey from New Zealand, I show that firms that produce more goods have both better information about aggregate inflation and more frequent but smaller price changes. To characterize the implications of these empirical findings for the ability of monetary policy to stimulate the economy, I develop a new dynamic general equilibrium model with rationally inattentive multi-product firms that pay a menu cost to reset their prices. I show that the interaction of the menu cost and rational inattention frictions leads firms to adopt a wait-and-see policy and gives rise to a new selection effect: firms have time-varying inaction bands widened by their subjective uncertainty about the economy such that price adjusters choose to be better informed than non-adjusters. This selection effect endogenously generates a distribution of desired price changes with a majority near zero and some very far from zero, which acts as a strong force to amplify monetary non-neutrality. I calibrate the model to be consistent with the micro-evidence on both prices and inattention and find two main quantitative results. First, the new selection effect, coupled with imperfect information of price setters, leads to real effects of monetary policy shocks in the one-good version of the model that are nearly as large as those in the Calvo model. Second, in the two-good version of the model, as firms optimally choose to have better information about monetary shocks, the real effects of monetary policy shocks decline by 20%.

Joint work with Hassan Afrouzi

--- Matlab/Julia Solver for Dynamic Multidimensional Rational Inattention Models

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

This version: 2019/10. [Draft].

We develop a tractable and portable method for characterizing the solution to dynamic multivariate rational inattention models in linear quadratic Gaussian settings. We apply our framework to propose an attention driven theory of the Phillips curve, the slope of which is endogenous to how monetary policy is conducted. We show that the Phillips curve is flatter when the monetary policy is more hawkish: rationally inattentive firms find it optimal to ignore monetary policy shocks when the monetary authority commits to stabilize nominal variables. Moreover, we show that an unexpectedly more dovish monetary policy leads to a completely flat Phillips curve in the short-run and a steeper Phillips curve in the long-run.

Joint work with Saroj Bhattarai and Felipe Schwartzman

FRB-Richmond Working Paper 19-07

This version: 2020/05. [Draft].

We show that the 2006-09 US housing crisis had scarring local effects. For a given county, a 10% reduction in housing wealth from 2006 through 2009 led to a 3.3% decline in employment by 2018, and a commensurate decline in value added. This persistent effect occurred despite the shock having no significant impact on labor productivity and only a short-lived impact on household demand, house prices, and household leverage. We find that the local labor market adjustment to the housing shock was particularly costly: local wages did not respond, and longrun convergence in the local labor market slack instead took place entirely through population losses in affected regions. These results on population adjustment leading to mean-reversion in local slack extend the seminal observations by Blanchard and Katz (1992) to the effects of a temporary and identified local demand shock. Additionally, we show that the housing bust, compared with the housing boom, had asymmetric effects on employment and wages, indicating a role for downward wage rigidity.

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

CESifo Working Paper No. 7630

This version: 2019/04. [Draft].

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