Rubén Domínguez- Díaz

Welcome to my website!

I am Ph.D. candidate in Economics at the Bonn Graduate School of Economics, doctoral fellow of the Research Training Group 2281 "The Macroeconomics of Inequality", and member of the Young ECONtribute Program (YEP).

My research interests include macroeconomics, inequality, monetary, fiscal and labor market policies.

You can find my CV here.

You can contact me at: dominguezdiazruben [at] gmail [dot] com

I am currently on the job market and available for interviews, including at the EEA 2021 and ASSA 2022 Annual Meetings

Working Papers

Precautionary Savings and Financial Frictions (Job Market Paper) [PDF]

Financial frictions not only impair lending, but also the expansion of the funding side of banks’ balance sheets. They restrict the supply of bank-issued demand deposits, which are the dominant liquid asset in households’ portfolios. Tight financial conditions, thus, render economies less resilient to shocks that lead households to demand more liquid savings. I first show that the empirical response to one such shock, a shock to household income uncertainty, is more recessionary when financial conditions are tight. Moreover, deposits do not rise. Next, I rationalize this in a two-asset New Keynesian model with heterogeneous households and a leverage constraint in the banking system that constrains liquidity transformation. A binding leverage constraint impairs the intermediation of precautionary savings, dampens the rise of both bank credit and liquid deposits, and leaves the increased demand for liquidity unsatisfied. This, finally, leads to a marked fall in household consumption.

Hiring Stimulus and Precautionary Savings in a Liquidity Trap [PDF]

This paper assesses the ability of hiring subsidies to stimulate employment. I build a New Keynesian model with equilibrium unemployment and incomplete markets. Quantitatively, I find that an increase in hiring subsidies reduces unemployment more at the zero lower bound than it does during normal times. Central to this result is a precautionary savings channel. By stimulating labor demand, hiring subsidies reduce unemployment risk and precautionary savings. This increases the demand for consumption goods and generates inflationary pressures. At the zero lower bound, higher inflation expectations reduce the real interest rate, further stimulating consumption and hence amplifying the hiring stimulus.

Work in Progress

Unemployment Insurance, Unemployment Risk and Fiscal Multipliers, with Donghai Zhang

We show that exogenous variations in regional unemployment insurance (UI) affect the transmission of regional fiscal policy shocks. We then build a quantitative New Keynesian model with heterogeneous households, equilibrium unemployment and stochastic duration of unemployment benefits to explore the aggregate implications for the conduct of fiscal policy.