Lukas Hack

Welcome!

I am a Post-Doctoral Researcher at ETH Zürich. I received a doctoral degree from the University of Mannheim in 2024, and I am a member of the Bonn-Mannheim Collaborative Research Center Transregio 224, funded by the German Research Foundation (DFG). My main research fields are macroeconomics, monetary economics and public economics.

Curriculum Vitae

News and Upcoming Talks

Next talk: Annual Research Conference of the DNB (Amsterdam), Nov 21-22

I received the Reinhard Selten Award 2024 for my research on: Progressive Income Taxation and Inflation: The Macroeconomic Effects of Bracket Creep

New working paper: Understanding Firm Dynamics with Daily Data

Working Papers:

Identification of Systematic Monetary Policy [abstract]
(with Klodiana Istrefi and Matthias Meier, December 2023)
Review of Economic Studies, revise and resubmit

Abstract
We propose a novel identification design to estimate the causal effects of systematic monetary policy on the propagation of macroeconomic shocks. The design combines (i)~a time-varying measure of systematic monetary policy based on the historical composition of hawks and doves in the Federal Open Market Committee (FOMC) with (ii) an instrument that leverages the mechanical FOMC rotation of voting rights. We apply our design to study the effects of government spending shocks. We find fiscal multipliers between two and three when the FOMC is dovish and below zero when it is hawkish. Narrative evidence from historical FOMC records corroborates our findings.

Abstract

We propose a novel identification design to estimate the causal effects of systematic monetary policy on the propagation of macroeconomic shocks. The design combines (i)~a time-varying measure of systematic monetary policy based on the historical composition of hawks and doves in the Federal Open Market Committee (FOMC) with (ii) an instrument that leverages the mechanical FOMC rotation of voting rights. We apply our design to study the effects of government spending shocks. We find fiscal multipliers between two and three when the FOMC is dovish and below zero when it is hawkish. Narrative evidence from historical FOMC records corroborates our findings.

[CEPR DP] [ECB WP] [Ungated] [Vox EU] [ECB Research Bulletin] [SUERF Policy Brief] [BibTex]

The Systematic Origins of Monetary Policy Shocks [abstract]
(with Klodiana Istrefi and Matthias Meier, May 2024)

Abstract
Conventional strategies to identify monetary policy shocks rest on the implicit assumption that systematic monetary policy is constant over time. We formally show that these strategies do not isolate monetary policy shocks in an environment with time-varying systematic monetary policy. Instead, they are contaminated by systematic monetary policy and macroeconomic variables, leading to contamination bias in estimated impulse responses. Empirically, we show that Romer and Romer (2004) monetary policy shocks are indeed predictable by fluctuations in systematic monetary policy. Instead, we propose a new monetary policy shock that is orthogonal to systematic monetary policy. Our shock suggests U.S. monetary policy has shorter lags and stronger effects on inflation and output.

Abstract

Conventional strategies to identify monetary policy shocks rest on the implicit assumption that systematic monetary policy is constant over time. We formally show that these strategies do not isolate monetary policy shocks in an environment with time-varying systematic monetary policy. Instead, they are contaminated by systematic monetary policy and macroeconomic variables, leading to contamination bias in estimated impulse responses. Empirically, we show that Romer and Romer (2004) monetary policy shocks are indeed predictable by fluctuations in systematic monetary policy. Instead, we propose a new monetary policy shock that is orthogonal to systematic monetary policy. Our shock suggests U.S. monetary policy has shorter lags and stronger effects on inflation and output.

[CEPR DP] [Ungated] [BibTex]

Understanding Firm Dynamics with Daily Data [abstract]
(with Davud Rostam-Afschar, August 2024)

Abstract
How do firms respond to macroeconomic shocks? To study this question, we construct novel daily time series that measure firms’ plans and expectations based on surveys from Germany. Daily variation allows us to estimate the short-run aggregate responses of firms in short samples. This allows us to analyze the post-pandemic inflation surge without relying on pre-pandemic data. We find that firms’ plans, notably price-setting plans, respond within days to oil supply and monetary policy shocks but not to forward guidance shocks. The effects are especially strong for small and non-tradeable sector firms. Finally, expectations respond strongly and swiftly, but only to monetary policy.

Abstract

How do firms respond to macroeconomic shocks? To study this question, we construct novel daily time series that measure firms’ plans and expectations based on surveys from Germany. Daily variation allows us to estimate the short-run aggregate responses of firms in short samples. This allows us to analyze the post-pandemic inflation surge without relying on pre-pandemic data. We find that firms’ plans, notably price-setting plans, respond within days to oil supply and monetary policy shocks but not to forward guidance shocks. The effects are especially strong for small and non-tradeable sector firms. Finally, expectations respond strongly and swiftly, but only to monetary policy.

[Ungated] [CRC DP] [SSRN] [BibTex] [Daily Business Database]

Work in progress:

Progressive Income Taxation and Inflation: The Macroeconomic Effects of Bracket Creep [abstract]

Abstract
Under nominal progressive taxation, inflation drives up tax rates if the schedule is not adjusted, leading to bracket creep. To isolate bracket creep from other sources of tax rate changes, I propose a non-parametric decomposition of changes in tax rates. Applying the decomposition to German administrative tax records, I find sizeable bracket creep episodes. While the overall importance of bracket creep has decreased over time due to institutional changes, the post-Covid inflation surge led to a resurgence. I characterize how bracket creep affects labor supply decisions in a partial equilibrium framework. Further, I estimate a theory-consistent measure of bracket creep, the indexation gap, which is used to discipline a New Keynesian model with incomplete markets. The model predicts that a given reduction in inflation via a monetary contraction leads to less output costs in an economy with bracket creep.

Abstract

Under nominal progressive taxation, inflation drives up tax rates if the schedule is not adjusted, leading to bracket creep. To isolate bracket creep from other sources of tax rate changes, I propose a non-parametric decomposition of changes in tax rates. Applying the decomposition to German administrative tax records, I find sizeable bracket creep episodes. While the overall importance of bracket creep has decreased over time due to institutional changes, the post-Covid inflation surge led to a resurgence. I characterize how bracket creep affects labor supply decisions in a partial equilibrium framework. Further, I estimate a theory-consistent measure of bracket creep, the indexation gap, which is used to discipline a New Keynesian model with incomplete markets. The model predicts that a given reduction in inflation via a monetary contraction leads to less output costs in an economy with bracket creep.

Transmission of Monetary Policy in a Currency Area with Heterogeneous Households
(with Hannes Twieling)

Abstract
working paper coming soon