About Me
Welcome! My name is Matthias Hänsel and I am a PhD student at the Stockholm School of Economics.
I expect to graduate in Summer 2025 and will participate in the 2024/2025 academic job market.
My field of research is Macroeconomics with a particular focus on household heterogeneity, monetary & fiscal policy, labor markets and computational methods.
You can find my CV here and more information about my research below.
Current Research
Idiosyncratic Risk, Government Debt and Inflation
Job Market Paper - Old version (ArXiv)
Click for Abstract
How does public debt matter for price stability? When the private sector values it to insure against idiosyncratic risk, even transitory government debt expansions can exert upward pressure on interest rates and generate inflation. As I demonstrate analytically, this holds under an active Taylor rule and does not require the absence of future fiscal consolidation. A quantitative 2-asset HANK model furthermore reveals that the magnitude of the inflation impact depends on the structure of the asset market: In order to match relevant evidence regarding the relationship between public debt and treasury returns, the markets for liquid and illiquid assets can neither be entirely segmented nor entirely integrated. The model suggests that in the US, public debt itself played a modest role in producing the inflation peak in 2022, but is crucial to inflation remaining elevated thereafter.
Presented at: Stockholm School of Economics (2023, 2024), SHoF National PhD Workshop in Finance (2023), RGS Doctoral Conference (2024), Riksbank PhD Workshop in Money and Finance (2024), University of Mannheim, Midwest Macroeconomics Meeting (Spring 2024), ENTER Jamboree (2024), North American Summer Meeting of the Econometric Society (2024), Vigo Workshop on Dynamic Macroeconomics (2024), EEA-ESEM Congress (2024), VfS Annual Meeting (2024)
HANK faces Unemployment
(joint with Agostino Consolo) ECB Working Paper 2024/2953
Click for Abstract
Since the advent of Heterogeneous Agent New Keynesian (HANK) models, countercyclical unemployment risk has been deemed an important amplification mechanism for business cycles shocks. Yet, the aggregate effects of such “unemployment fears” are hard to pin down: We thus revisit this issue in the context of a rich two-asset HANK model proposing new ways to isolate their general equilibrium effects and tackle the long-standing challenge of modelling wage bargaining in this class of model. While unemployment fears can exert noticeable aggregate effects, we find their magnitude to depend importantly on the distribution of firm profits. Households’ ability to borrow stabilizes the economy. Our framework has also implications for policy: In the aftermath of an adverse energy price shock, fiscal policy can help reduce the hysteresis effects on unemployment and most households gain if the central bank accommodates an employment recovery at the cost of higher inflation.
Presented at: Stockholm School of Economics, European Central Bank, Uppsala University, New York University
Solving Bewley Models with Bilateral Wage Bargaining
[Draft available upon request]
Click for Abstract
Search-and-Matching models with incomplete markets a la Bewley appear challenging to solve, as standard wage bargaining protocols imply workers' wages to depend on their wealth. In fact, I demonstrate that they can be analyzed quickly by building on the Endogenous Grid Method (EGM), particularly if one uses a novel Match-Integrated Endogenous Grid Method (MIEGM): Its key feature is that it obtains worker- and firm value functions jointly instead of solving an outer functional fixed point problem. I show that this fast algorithm can be applied to a variety of models, including set-ups with endogenous separations or intensive margin labor supply. Additionally, the joint solution procedure facilitates studying aggregate shocks and transition dynamics using recent Sequence Space methods.
Presented at: Fed St. Louis-JEDC-SCG-SNB-Conference on Heterogeneity and Macroeconomics of Labor Markets (Poster Session)
Monetary Policy Transmission, Central Bank Digital Currency, and Bank Market Power
(joint with Hanfeng Chen and Hiep Nguyen) Draft
Click for Abstract
Interest rates on new central bank digital currencies (CBDCs) can be expected to enter the monetary policy toolkit soon. Using an extended Sidrauski (1967) model featuring an oligopsonistic banking sector, we study the complex transmission of interest rates on CBDC, which generally involve both direct and indirect effects. This is because a CBDC rate cut does not only affect the rate on the CBDC itself, but also induces the non-competitive deposit providers to adjust their spreads, as the new substitute for their products becomes relatively less attractive. A calibration exercise suggests that the indirect effects depend strongly on the sources of deposit market power: If driven by high concentration, they substantially amplify the aggregate effects of the CBDC policy rate, both in response to transitory shocks as well as regarding its long-run welfare effects. This contrasts them with policies directed at the banking sector which are weakened by a less competitive deposit market.
Presented at: Stockholm School of Economics, SHoF National PhD Workshop in Finance (2021, by co-author), Uppsala University (by co-author)
Work in Progress
Automation when Skills Are bundled
(joint with Sofia Hernnäs)
New, improved version of Hernnäs (2023)
Publications
Solving the Diamond-Mortensen-Pissarides model: A hybrid perturbation approach
Economics Letters 236 (2024), 111624 Published Version (Open Access)
Click for Abstract
Projection methods are deemed necessary to accurately solve various variants of the Diamond-Mortensen-Pissarides model used in business cycle research. This paper argues that hybrid perturbation, once combined with a non-linear change of variable, can provide an alternative, producing accurate solutions while retaining most of the simplicity of standard perturbation: Applying the method to the Hagedorn and Manovskii (2008) model, it delivers high accuracy and nearly identical business cycle moments as recent projection approaches.
Coding
I occasionally write code notebooks demonstrating numerical methods. Currently, the following is available:
- A Notebook demonstrating the Sequence Space method by Auclert et al. (2021) in Julia.
- A Notebook solving a more involved model using different variants of the Auclert et al. (2021) method.