My broad research interests are in applied macroeconomics, monetary and fiscal policy, public finance, housing and mortgage markets, and innovation and growth. My current research is focused on the returns to public R&D spending, U.S. business cycles and growth, and U.S. housing credit policy and secondary mortgage markets.
Publications and Forthcoming:
The Macroeconomic Effects of Government Asset Purchases: Evidence from Postwar U.S. Housing Credit Policy, joint with Karel Mertens and Morten O. Ravn, Quarterly Journal of Economics, 133 (3): 1503-1560. Online appendices. Data. Replication files.
Previously available as NBER Working Paper 23154. ASSA 2018 slides. VoxEU column.
We document the portfolio activity of federal housing agencies and provide evidence on its impact on mortgage markets and the economy. Through a narrative analysis, we identify historical policy changes leading to expansions or contractions in agency mortgage holdings. Based on those regulatory events that we classify as unrelated to short-run cyclical or credit market shocks, we find that an increase in mortgage purchases by the agencies boosts mortgage lending, in particular refinancing, and lowers mortgage rates. Agency purchases also influence prices in other asset markets, stimulate residential investment, and expand homeownership. We compare these effects to those of conventional monetary policy shocks, and we provide evidence on the interactions between housing credit and monetary policies.
Media coverage: Marketplace
The Emergence of a Uniform Business Cycle in the United States: Evidence from New Claims-Based Unemployment Data, joint with David Munro, Christoffer Koch, and Sean Howard.* Brookings Papers on Economic Activity, Spring 2024: 265–319. Replication files and claims-based unemployment rate dataset. BPEA Slides. Online Appendix.
Using newly digitized unemployment insurance claims data, we construct historical monthly unemployment series for US states going back to January 1947. We validate our series, showing that they are highly correlated with the Bureau of Labor Statistics’ state-level unemployment data, which are only available since January 1976, and capture consistent business cycle dynamics. We use our claims-based unemployment rates to study the postwar evolution of labor market adjustments to local demand shocks and state unemployment fluctuations around national recessions. We document: (1) a trend decrease in the dispersion of relative employment growth and unemployment across states; (2) an attenuation of relative employment, unemployment, and population responses to state-specific demand shocks in recent decades; and (3) a convergence across states in both the speed and degree to which unemployment recovers after recessions. These trends show the emergence of a national business cycle experienced more uniformly across US states, particularly since the 1960s. We present evidence suggesting that a convergence in states’ industrial composition helps explain why a more uniform business cycle emerged when it did. And states’ increasingly similar experience in recessions may help explain why interstate migration became a weaker adjustment mechanism in recent decades.
*A previous draft was circulated as “A New Claims-Based Unemployment Dataset: Application to Postwar Recoveries Across U.S. States,” IMF Working Paper No. 2022/117.
The Social Returns to Public R&D, joint with Karel Mertens, forthcoming in Entrepreneurship and Innovation Policy and the Economy, Volume 5, Eds. Ben Jones and Josh Lerner, National Bureau of Economic Research. Also available as NBER Working Paper 33780 and Federal Reserve Bank of Dallas Working Paper 2519. Latest slides.
Media coverage: New York Times; MIT Technology Review; STAT; Faculti; New Things Under the Sun; American Enterprise Institute’s blog.
Recent empirical evidence by Fieldhouse and Mertens (2024) points to a strong causal link between federal nondefense R&D funding and private-sector productivity growth, and large implied social returns to public R&D investment. We show that these high social return estimates broadly align with existing evidence on the social returns to private or total R&D spending. If the R&D increases authorized under the CHIPS and Science Act were fully appropriated, our modeling indicates a boost in U.S. productivity within a few years, reaching gains of 0.2–0.4% after seven years or more. At their peak, the direct productivity effects of the implied expansion in nondefense R&D alone would raise output by over $40 billion in a single year—exceeding total outlays from the CHIPS Act R&D provisions over a decade. The potential productivity impact of fiscal consolidations changing R&D spending is not clear ex ante. We show that in recent fiscal consolidations, cuts to federal R&D funding were largely borne by defense R&D, whereas funding for nondefense R&D was largely spared or was increased. Our evidence suggests that future deficit reduction efforts that instead emphasize cuts to nondefense R&D funding could have a larger adverse impact on productivity and economic growth than previous fiscal consolidations.
Working Papers:
The Returns to Government R&D: Evidence from U.S. Appropriations Shocks, joint with Karel Mertens (updated December 2025). Data. Latest slides. Also available as Federal Reserve Bank of Dallas Working Paper 2305 and a short Dallas Fed blog post summary.
Conditionally accepted, American Economic Review.
Based on a narrative classification of all significant postwar changes in R&D appropriations for five major federal agencies, we find that an increase in nondefense R&D appropriations leads to increases in various measures of innovative activity and higher business-sector productivity in the long run. We structurally estimate the production function elasticity of nondefense government R&D capital using the SP-IV methodology of Lewis and Mertens (2023) and obtain implied returns of 140 to 210 percent over the postwar period. The estimates indicate that government-funded R&D accounts for one-fifth of business-sector TFP growth since WWII, and imply substantial underfunding of nondefense R&D.
Media coverage: New York Times; Forbes; NPR; Planet Money; Bloomberg; Texas Standard; Science Vs; Barron’s; MIT Technology Review; The Conversation; The Chronicle of Higher Education; New York Times; Science; South Bend Tribune; STAT; New Things Under the Sun; American Enterprise Institute; Chemical & Engineering News.
Policy impact: Remarks by Secretary of the Treasury Janet L. Yellen at the Economic Club of New York, June 13, 2024; Testimony of Dr. Walter G. Copan, Vice President for Research and Technology Transfer, Colorado School of Mines, before the House Committee on Science, Space, and Technology, February 24, 2025; Testimony of Senior Economist Adam S. Hersch, Economic Policy Institute, before the House of Representatives Oversight Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs, April 29, 2025; Testimony of Dr. Jonathan A. Bagger, CEO, American Physical Society, for the U.S. House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies, May 9, 2025; The Congressional Budget Office’s Preliminary Analysis of How Federal Investment in Nondefense Research and Development Affects the Economy and the Federal Budget, July 30, 2025; Center on Budget and Policy Priorities report “Administration’s Proposed Cuts to Non-Defense R&D Pose Long-Term Risk to Rising Living Standards,” October 6, 2025; U.K. Department for Science, Innovation and Technology report “The value of public R&D,” October 30, 2025.
A Narrative Analysis of Federal Appropriations for Research and Development, joint with Karel Mertens. Also available as Federal Reserve Bank of Dallas Working Paper 2316.
This paper provides a narrative analysis of postwar federal appropriations for the research and development (R&D) activities of the Department of Defense, Department of Energy, National Aeronautics and Space Administration, National Institutes of Health, and National Science Foundation—five agencies that consistently account for the vast majority of federal outlays for all types of R&D. We build a novel dataset quantifying the enacted full-year appropriations for all budgetary accounts funding R&D activities at these five agencies over fiscal years 1947-2019. We use this dataset to isolate a subset of 218 “significant” changes in real appropriations for each agency, and we analyze numerous primary and secondary sources to understand the context and motivation. Based on these sources, we classify each significant change in federal R&D appropriations as either “endogenous” or “exogenous” to short-run macroeconomic developments. The exogenous changes in R&D appropriations are intended as instrumental variables for studying the causal effects of government R&D in appropriately specified empirical models.
Macroeconomic Shocks and Cross-sectional Stock Returns, joint with Hagen Kim and Arvind Mahajan.
We contribute new evidence that a host of previously identified macroeconomic shocks have significant explanatory power for cross-sectional stock returns and establish causal relationships between them. We find that monetary shocks, credit shocks, oil shocks, and fiscal shocks have significant causal effects on the cash flow and discount rate news components of market returns, industry portfolio returns, and portfolios sorted by the Fama-French factors, anomaly characteristics, and anomaly mispricing factors. Macroeconomic shocks collectively explain 5% to 50% of the residual variance in cross-sectional stock returns, underscoring the importance of causal mechanisms between macroeconomic factors and stock returns. Certain shocks primarily predict behavioral anomalies and mispricing factors, and our results shed light on the fundamental nature of various stock return anomalies.
Crowd-out Effects of U.S. Housing Credit Policy. Latest slides.
Credit policies can expand targeted lending volumes by subsidizing private credit risks, and an expansion in targeted lending may crowd out other loans. I document that U.S. housing credit policies subsidizing an expansion in residential mortgage lending unintentionally crowd out commercial lending and related real activity. I use a long history of regulatory changes for exogenous variation in the mortgage purchases of Fannie Mae and Freddie Mac, government-sponsored enterprises that subsidize mortgage borrowing. Regulatory shocks to subsidized mortgage purchases crowd in private home mortgage lending while unintentionally crowding out commercial mortgages and loans. U.S. housing credit policies similarly reallocate construction activity toward housing and away from commercial real estate, negating any intended stimulus to aggregate construction or employment. I contribute evidence that the transmission of such mortgage purchases operates through a mortgage origination channel and a safe asset supply channel, which induce significant reallocations in bank lending. I explore implications for unwinding the Federal Reserve’s mortgage holdings and eventual reforms to Fannie and Freddie.
A Narrative Analysis of Mortgage Asset Purchases by Federal Agencies, joint with Karel Mertens, NBER Working Paper No. 23165 (updated July 2017). Online appendix.
This paper provides a narrative analysis of regulatory policy changes affecting the purchases and holdings of mortgages and related securities of five US government entities over the 1968–2014 period. We focus on federal government policies that aim to influence the allocation and/or volume of the supply of residential mortgage credit. We use contemporary primary sources and various institutional histories to identify significant policy interventions, to document their economic and regulatory context, surrounding motives, and pertinent timing, as well as to quantify projected impacts on agencies’ mortgage holdings. Finally, we classify each significant policy change as either “cyclically motivated” or “unrelated to the business and/or financial cycle.”
Work in Progress:
Effects of Publicly Funded R&D on Firms Conducting Contract R&D, joint with Adam Kolasinksi and Karel Mertens (U.S. Census Bureau Project #3195)
International Spillovers of Government-Funded R&D, joint with Karel Mertens and Gustavo de Souza
Research Grants and Awards
Graduate School Conference Travel Grant, Cornell University, Fall 2018.
Dissertation Fellowship, Federal Reserve Board of Governors, Summer 2018.
Graduate School Conference Travel Grant, Cornell University, Spring 2018.
Graduate School Research Travel Grant, Cornell University, Fall 2017.
L.R. “Red” Wilson MA ‘67 Excellence in Economics Medal and Research Prize, Fall 2015.
External Research Profiles and Repositories