Alessandro T. Villa

This is my overall take on research: follow your calling. Write a paper that only you could have written. Each of us is a unique, complex individual. We have our own experiences, knowledge, curiosity, interests, fears, loves, and traumas. These rich personal idiosyncrasies, if well channeled, can translate into a new angle on any topic. If it’s a question someone else could have answered, in a way someone else could have done it, written as someone else would have written it, LET SOMEONE ELSE DO IT. That is not your calling. There is something out there, in the space of all knowledge to be gained, that only YOU could have taught the world. Your mission is to find that and teach us.​​​​​​​​​​​​​​​​ And I, honestly, look forward to that.

Interested in becoming a research assistant? Join our research team on April 17 for Fed Life Unlocked – a virtual event focused on what life is like as an RA here at the Chicago Fed. bit.ly/4tgErw5

⏰⏰Apply by next Monday (Apr 6) for ML for Macro & Finance Summer School in Beijing! • HA basics+computation (Maliar) • Deep Eqm Nets (@comp_simon & Kübler) • DeepHAM+SRL (@ben_moll & me) • Continuous-time method (Payne & Gopalakrishna) Daily tutorials: from theory to code🚀

sites.google.com/umn.edu/minnes… 📢 Call for Papers! The MN Workshop in Macroeconomic Theory is now accepting submissions. Conference runs July 29–31 at the University of Minnesota, featuring 14 discussions. Submit your paper by April 24. #MacroEcon #CallForPapers

@td_econ @RevEconStudies Congrats 👏 Very interesting paper!

My paper "Political Pressure on the Fed" has been accepted for publication at the Review of Economic Studies! @RevEconStudies Thank you to everyone who provided useful input for this research project! Latest draft here: econweb.umd.edu/~drechsel/pape…

A guide for students of economics: Ten statements that demonstrate that someone does not understand modern economics or what an equilibrium is, and that you can safely ignore everything else they say. 1. “Equilibrium means the economy is stable or at rest.” Many assume that an equilibrium is a peaceful state with no forces at play. Instead, an equilibrium is just an arrangement of actions and expectations over time that are mutually consistent. It can be locally unstable, explosive, or fragile. Nothing in the definition of equilibrium implies stability. 2. “Equilibrium implies optimality or social efficiency.” Equilibrium is often conflated with efficiency, but equilibrium merely reflects decentralized consistency, not welfare maximization. Market power, externalities, incomplete markets, nominal rigidities, and frictions routinely produce inefficient equilibria. I often teach a first-year macro graduate course, and not a single one of the equilibria I define is efficient. 3. “Equilibrium is a unique outcome.” Many often expect models to have one equilibrium. In reality, multiple equilibria arise naturally in dynamic, strategic, and incomplete-market environments. Models of coordination failures, self-fulfilling expectations, bubbles, overlapping generations, and liquidity traps all hinge on the existence of equilibrium multiplicity. 4. “Equilibrium requires perfect foresight or perfect information.” Equilibrium does not assume agents know the future. In fact, equilibria are often stochastic. The definition of equilibrium only requires that beliefs are consistent with the (perceived) stochastic laws of motion implied by the model. Bayesian learning, noisy signals, ambiguity, and subjective uncertainty all fit well within an equilibrium framework, provided beliefs converge to an internally consistent (but possibly incorrect) distribution. Bonus point: equilibria are compatible with agents having diverging beliefs that never converge to a single Dirac distribution. 5. “Real economies are rarely in equilibrium, so the concept is unrealistic.” Equilibrium is not meant to describe the daily state of the world. It is a conceptual device used to understand the outcome of our models under the assumptions we make. Also, see point 1 above. 6. “Equilibrium requires agents to be fully rational in a psychological sense.” Equilibrium only assumes internal consistency: agents optimize given preferences and constraints. It does not assume realism about human cognition. We can and do define equilibria in models with behavioral biases, bounded rationality, inattention, or rule-of-thumb behavior. We only need to ensure that the resulting actions and beliefs are mutually compatible. 7. “Equilibrium eliminates dynamics or learning.” Equilibrium is sometimes misinterpreted as a static state in which nothing evolves. In fact, many equilibria are sequences of probability distributions over states driven by shocks, policy rules, and endogenous responses. Learning dynamics (Bayesian updating, adaptive rules, experience-based expectations) can occur within equilibrium if the evolution of beliefs is self-consistent. 8. “Equilibrium renders expectations unimportant.” A common misconception is that equilibrium mechanically determines outcomes. In reality, expectations are often central: they determine investment, consumption, asset prices, and policy responses. Many equilibria differ only in their expectations. This is why communication, credibility, and forward guidance matter even in fully rational models. 9. “Equilibrium excludes policy intervention.” Some interpret equilibrium as a laissez-faire concept. In fact, equilibrium analysis is the foundation of modern policy evaluation. Fiscal, monetary, and regulatory interventions work through equilibrium responses (prices, wages, interest rates, quantities) and must satisfy equilibrium conditions to be credible. Equilibrium is a tool for policy design, not a barrier to it. 10. “Equilibriums…” Aequilibrium is a Latin neuter noun of the second declension, which forms a nominative plural in “a”. It is composed of aequus (equal; the same root as equality or equity) and libra (balance or scales or the name of several currencies over history). A final thought: “equilibrium” is a term of art. Its meaning in economics differs from its use in the natural sciences or in everyday language. Terms of art are ubiquitous across academic disciplines, and the first act of intellectual diligence when one starts studying a discipline is to learn what they mean.

Kellogg School of Management PhD Candidate Xiaojie (Alan) Liu’s research interests are Macroeconomics, Monetary Economics, Economic Growth. Learn more about @xiaojieliu1993 & other Northwestern Job Market Candidates at economics.northwestern.edu/job-market-can…

Coordinated communication amplifies monetary transmission. New VoxEU column with @MNDjourel, @LeonardoMelosi, and Filippo Ferroni.

New CEPR Discussion Paper - DP20636 One Fed, Many Voices: Coordinated Communication vs. Transparent Debate @MNDjourel, Filippo Ferroni @Unibo, @LeonardoMelosi, @forket86 ow.ly/bUc750WVCrO #CEPR_MEF #EconTwitter

Macro Fluctuations with Micro Frictions (MFMF) at the @bse_barcelona Summer Forum @jandres_blanco @jan_eeckhout @Simon_Mongey

A fantastic session asking whether there is a “core of usable Macroeconomics we should all believe in” with contributions from @a_auclert, @EichMartin, @JonasDMFisher, @BHobijn, @forket86, and Ayse Imrohoroglu. Worth reading and rereading the papers!

New CEPR Discussion Paper - DP19795 On-the-Job Search and #Inflation under the Microscope Saman Darougheh @nationalbanken, Renato Faccini @nationalbanken @CFMUK, @LeonardoMelosi @warwickuni @EUI_ECO @DNB_NL, @forket86 @ChicagoFed ow.ly/37Yr50UucYZ #CEPR_MG #EconTwitter

The 3rd LAEF Junior Macro Conference ends at Hot Springs Canyon Trail. Thank you to the organizers!

New CEPR Discussion Paper - DP19099 Investment-Goods Market Power and #Capital Accumulation @EconFaber @bancaditalia @UfficioStampaBI, @drewkoke @DukeU @DukeEcon, @forket86 @ChicagoFed ow.ly/nqRk50S0nFn #CEPR_MEF #CEPR_MG

DP19099 Investment-Goods Market Power and Capital Accumulation cepr.org/publications/d… # via @cepr_org with @drewkoke and @EconFaber

@VytautasValait2 and I are happy to see this paper out in @RevEconStudies! See the thread below for a summary.

.@ChicagoFed Workshop on International Economics We are bringing back a workshop series on International Economics! Our revival edition features great papers by Matthias Hoelzlein (@NotreDame), @LeiboviciF (@stlouisfed @STLFedResearch), @lyd_cox (@UWMadison), Javier Cravino (@UMich), and myself. If you want to join us, register here: web.cvent.com/event/a17ac046… People from neighboring departments are especially welcomed! @NorthwesternU @KelloggSchool @UChicago @ChicagoBooth @nd_econ

@MarlonAzinovic @UNC 👏

I am over the top happy, grateful, and excited to share that I will join the Macro group at the Economics Department of the University of North Carolina at Chapel Hill (@UNC ) as Assistant Professor this fall.

Priceless Tom Sargent. ht @mvazcar

Very happy to see that what started as a second-year project is finally getting published! Me and @forket86 are grateful to all the people who helped along the way.