Academic Profile

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Klaus Adam

Professorial Fellow
Professor of Economics

Klaus Adam is Nuffield Professor of Economics and a Professorial Fellow at Nuffield College. He is also Research Professor at the Deutsche Bundesbank, a member of the Academic Advisory Board of the German Ministry of Finance, and Scientific Chair of the Euro Area Business Cycle Network (EABCN).  His research work focuses on monetary and fiscal policy making, as well as on issues related to learning and the formation of expectations with  applications to asset pricing and business cycle dynamics.

Further information is available on my personal webpage.

 

Publications

Since 2016:

Optimal Trend Inflation, with Henning Weber,
American Economic Review  (forthcoming)

The optimal rate of steady state  inflation in sticky price models is  positive once one incorporates firm  heterogeneity and plausible  firm-level productivity trends. We provide closed-form expressions for  the optimal inflation rate and estimate the  optimal US inflation rate  to range between 1 and 3 % per year.  

 

Stock Price Booms and Expected Capital Gains, with Albert Marcet and Johannes Beutel, American Economic Review, Vol. 107(8), 2352–2408, 2017

Shows that variations in investors’ subjective capital gains expectations are a key driver of fluctuations in postwar US stock prices. Dropbox link to MatLab code and documentation here.

 

Optimal Sovereign Default (with Applications to the Greek Case), joint with Michael Grill, American Economic Journal: Macroeconomics, Vol. 9(1), pp. 128–164, 2017, working paper version

Determines a normative benchmark for optimal sovereign default in a setting in which default is costly and government bond markets are incomplete. Argues that the observed sovereign default in Greece has been too small and not timely enough. .Excel data file with Greek data and calibration 

  

Price Level Changes and the Redistribution of Nominal Wealth Across the Euro Area, with Junyi Zhu, Journal of the European Economic Association, Vol 14(4), pp. 871-906, 2016, working paper version

Shows how unexpected price level decreases redistribute wealth across the Euro area. Determines the countries, economic sectors and households that win and lose. Stata data documentation files available here. Excel data appendix is available available here.

 

Stock Market Volatility and Learning, with Albert Marcet and Juan Pablo Nicolini, Journal of Finance, Vol. 71(1), pp. 33-82, 2016, working paper version

The standard consumption-based asset pricing model with time-separable preferences generates realistic amounts of stock price volatility if one allows for small deviations from rational expectations.      MatLab programs here