LATEST 

• The Twilight of Bretton Woods Project Syndicate

• La Fonte Blog:  Why the United States wants a weaker dollar – but can it afford it?

• Coming soon --- novel empirical evidence on the transmission of tariff shocsk "Trading Blows: The Exchange-Rate Response to Tariffs and Retaliations", Daniel Ostry SImon Lloyd and Giancarlo Corsetti

• Monetary Stabilization of Sectoral Tariffs joint with Paul Bergin, early 2025. 

See also The Macroeconomic Stabilization of Tariff Shocks: What is the Optimal Monetary Response?, Journal of International Economics, 143 103758 July 2023. Voxeu column, November 27 2024, La Fonte Blog: Monetary policy during a trade war: What comes next?

• Trading around Geopolitics, With Banu Demir and Beata Javorcik, Revised April 2025

Geopolitical fragmentation triggers complex dynamics in international trade. Sanctions, forcing existing exporters to discontinue or reduce their sales, create profit opportunities in targeted countries. But firms responding to these opportunities face (i) risk of nonpayment, (ii) reputational risks and the threat of punitive measures, if their trading with unfriendly countries is exposed, and (iii) higher costs of established trading practice, such as making payments in international currencies through international circuits. This paper examines the trade-offs involved through the lens of a stylized model and empirical analysis of Turkiye's exports in the aftermath of Western sanctions imposed on Russia after its invasion of Ukraine. The results show that, as Turkish exports to Russia have risen sharply,  Turkish firms have charged higher markups and prices, increased their reliance on cash-in-advance transactions and invoiced in Turkish liras instead of dollars.  However, affiliates of Western MNCs showed a significantly lower growth in exports to Russia, suggesting a desire to avoid reputational costs.  A back-of-the-envelope calculation points to annualized foregone revenues of $50 million for Turkish affiliates of Western MNCs, with the reputational risk effect equivalent to tariffs of up to 376%.

• New version Feb 2025: The Short Lags of Monetary Policy Buda, G., Carvalho, V. M., Corsetti, G., Duarte, J. B., Hansen, S., Moura, A. S., Ortiz, A., Rodrigo, T., Rodríguez Mora, J. V., Alves da Silva, G., (previously, Janeway Institute Working Paper 2308). 

We examine the transmission of monetary policy shocks to the macroeconomy at high frequency. To do this, we build daily consumption and  investment aggregates using bank transaction records and leverage administrative data for measures of daily gross output and employment for  Spain. We show that variables typically regarded as "slow moving", such as consumption and output, respond significantly within weeks. In contrast, the responses of aggregate employment and consumer prices are slow and peak at long lags. Disaggregating by sector,  consumption category  and supply-chain distance to final demand, we find that fast adjustment is led by downstream sectors tied to final  consumption—in particular luxuries and durables—and that the response of upstream sectors is slower but more persistent. Finally, we find that  time aggregation to the quarterly frequency alters the identification of monetary policy transmission, shifting significant responses to longer lags, whereas weekly or monthly aggregation preserves daily-frequency results.

• Keynes’s Economic Consequences of the Peace after 100 Years: Polemics and Policy, Edited by Patricia Clavin, Giancarlo Corsetti, Maurice Obstfeld and Adam Tooze, Cambridge University Press

• Markets and Markups: Evidence on the Rising Market Power of Exporters from China, Giancarlo Corsetti, Meredith Crowley, Lu Han and Huasheng Song, July 2019. NEW VERSION NOVEMBER 2024

We develop an empirical framework that decomposes the export price elasticity to the exchange rate into contributions from markup and marginal cost elasticities. This framework embodies a new estimator of the markup elasticity that controls for marginal costs and endogenous market participation, and a new classification of products  based on Chinese linguistics that helps refine the analysis of firms' market power. Using Chinese customs data, we document a two- to three-fold increase in markup elasticities across product and firm types after 2005, indicating exporters from China acquired substantial market power in foreign markets. 

• International Risk Sharing and Wealth Allocation with Higher Order Cumulants, with Anna Lipinska and Giovanni Lombardo, August 2024. Online appendix. conditionally accepted Review of Economic Studies, revision available soon

We study how risk sharing affects the macroeconomic allocation, asset prices and welfare. Employing perturbation and global methods, we characterize a global (multi-country) equilibrium in terms of asymmetries in higher-order moments  of non-Gaussian shocks and country size. Financial integration has consumption smoothing and wealth level effects. Wealth effects emerge through the revaluation of a country assets and terms of trade--- benefiting safer and/or smaller economies. Riskier countries enjoy smoother consumption, but at the expense of lower relative wealth. Although riskier countries gain more, safety command a welfare and financial premium, with welfare differences being near-linear in relative asset prices.

• The theory of reserve accumulation, revisited, with Seung Hyun (Fred) Maeng, Nov 2023, revised March 2024

• An early draft: Global Value Chains and International Risk Sharing, with Lucio D’Aguanno, Aydan Dogan, Simon Lloyd, Rana Sajedi; March 2024

• The first 25 years of the euro: A bird's-eye view, with Marco Buti. Text of the CEPR Policy Insight. Podcast.

New version coming soon:

• U.S. Risk and Treasury Convenience, with Simon Lloyd, Emile Marin and Daniel Ostry, Nov 2023

• The Exchange Rate Insulation, Revisited, Giancarlo Corsetti, Keith Kuester, Gernot Müller, Sebastian Schmidt CERP DP 15689. Revised December 2023. Voxeu column. Longer and more detailed version available as ECB WP 2630, revised December 2023

• Global Inflation and Exchange Rate Stabilization under a Dominant Currency, joint with Luca Dedola and Sylvain Leduc. 

Newly published/accepted papers

Books and E-books

Policy documents and columns

Cilento, Italy, 2013, Photo VC.