Date/Time
Date(s) - 17/11/2025
10:30 am - 12:00 pm

Tom Holden, researcher and macroeconomist in the Deutsche Bundesbank’s will present to our graduate students and faculty in KTH 334!

Prior to joining the Deutsche Bundesbank in 2018 he was an Assistant Professor at the University of Surrey. He obtained his undergraduate, master’s and doctoral degrees from the University of Oxford. Tom’s research focuses on monetary policy and dynamic macroeconomics. His work on using monetary rules to control inflation was recently published in Econometrica, and his work on the zero lower bound was published in the Review of Economics and Statistics. He is currently working on the macroeconomic implications of firm rationing, on yield curve estimation, on capital aggregation, on monetary implementation via inflation swaps, on spatial macroeconomics, and on dynamic models of endogenous growth.

He will present, “Rationing under sticky prices“.

Abstract

If prices are sticky, following large shocks, firms would like to ration demand to avoid selling goods at a price below marginal cost. However, the standard assumption in solving sticky price models is that firms sell the entire quantity demanded at their price. This paper investigates the consequences of allowing firms to ration under sticky prices, in a continuous time model with idiosyncratic demand shocks and endogenous price rigidity. Allowing rationing massive reduces the welfare costs of positive trend inflation. The loss of variety caused by rationing becomes the main welfare cost of variations in inflation. Rationing helps the model match empirical results from both micro & macro data. It produces a convex, backwards-bending Phillips curve. While expansionary monetary policy increases the model’s analogue of observed real GDP, it decreases the welfare relevant output aggregator.

Learn more about Tom’s work and connect with him through his professional website.