## PEOPLE IN ECONOMICS

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### Background and profile
- Emi Nakamura: professor of economics at the University of California, Berkeley; described as a rising star in economics and noted for investigating macroeconomic questions using micro data.
- Personal/professional background:
  - Grew up in Alberta, Canada; favorite movie The Race for the Double Helix.
  - Parents Alice and Masao Nakamura are economists (Alice at the University of Alberta; Masao at the University of British Columbia); cross-generational collaboration began with kitchen table conversations about GDP and inflation measurement.
  - Met husband and fellow Berkeley economics professor Jón Steinsson as undergraduates at Princeton University; they routinely coauthor papers.
  - Academic path: PhD at Harvard University; prior position as professor of economics at Columbia University before joining Berkeley in 2018.
- Recognition:
  - In 2018, The Economist listed her among the decade’s eight best young economists.
  - A year later she won the John Bates Clark Medal—awarded to the most influential American economist under the age of 40—for research on fiscal stimulus and price stickiness.

### Research approach and methodology
- Core methodological stance:
  - Uses micro data (information about individual people, households, and businesses) to answer macro questions when macro data have too few data points to identify causality.
  - Emphasis on painstaking attention to data and melding theory with empirical methods to identify economic mechanisms.
- Collaboration and lab affiliation:
  - Principal investigator at the Macro Policy Lab, which conducts data-driven and policy-relevant macroeconomic research.
  - Frequent coauthorship with Jón Steinsson and occasional collaboration with parents and students.

### Price stickiness and inflation research
- Motivation: Price-setting assumptions are key to differences between neoclassical models (monetary policy has no effect) and Keynesian models (monetary and fiscal stimulus have large effects).
- Key studies and findings:
  - Bils and Klenow (2004) found half of prices lasted less than 4.3 months using a 1995–97 extract of BLS micro data.
  - Nakamura and Steinsson, in “Five Facts about Prices” (2008):
    - Used actual BLS micro data expanded to cover 1988 to 2005.
    - Distinguished between temporary price cuts for sales and regular pricing.
    - Found regular prices were stickier than Bils and Klenow estimated once promotional discounts were removed.
    - Observed that prices changed much more frequently in times of high inflation.
  - Nakamura, Steinsson, and coauthors in “The Elusive Costs of Inflation” (2018):
    - Examined higher-inflation period between 1977 and 1988 using custom data collection (custom-made microfilm converter).
    - Confirmed regular prices were adjusted more frequently in periods of higher inflation.
  - “The Slope of the Phillips Curve” (2022) (Macro Policy Lab):
    - Going back to 1978, find that the slope of the Phillips curve is small—and has gotten only modestly smaller since the early 1980s.
    - Implication: Early 1980s disinflation was less about higher unemployment and more about anchored inflation expectations due to the new monetary regime instituted by Federal Reserve Chairman Paul Volcker.
- Policy implication emphasized:
  - Maintaining long-term inflation expectations and confidence in the monetary regime is key as central banks attempt to rein in inflation while growth dwindles.

### Fiscal stimulus and regional evidence
- Motivation: Limited academic evidence on fiscal stimulus following the Great Recession.
- “Fiscal Stimulus in a Monetary Union” (2014) findings:
  - Focused on US military spending because regional variation across US regions allows isolation of spending effects while monetary and tax policy remain common.
  - Analyzed 40 years of military purchases (ranging from repair of military facilities to purchase of new aircraft carriers).
  - Found evidence suggesting the fiscal multiplier could be large—fiscal stimulus could significantly boost growth.

### Social mobility and natural experiment: “The Gift of Moving” (2022)
- Natural experiment:
  - On January 23, 1973, a volcanic eruption on the Westman Islands off the south coast of Iceland forced immediate evacuation of all inhabitants.
  - Most inhabitants returned; those whose homes were destroyed were much less likely to return.
- Data and method:
  - Tracked parents and their children over the subsequent 34 years using detailed data on income, education, and genealogical linkages for the Icelandic population.
- Findings:
  - Children who moved had higher levels of education and earnings than if they had stayed.
  - Parents of movers earned slightly less.
  - Broader implication: Large costs borne by parents may discourage moving, acting as a barrier to social mobility.
  - Noted that many movers went to lower-income areas; gains for children depended on alignment of skills with local opportunities (example: high returns for fishing-industry skills on the Westman Islands, but not for other skills).

### Current and ongoing work
- Research topics under investigation:
  - How exchange rate depreciations affect economic activity.
  - Economic effects of unemployment insurance extensions.
  - Impact of seasonal adjustment methods used for government statistics.

### Collaboration, mentorship, and intellectual style
- Working dynamics with Jón Steinsson:
  - Complementary strengths: Nakamura’s meticulousness and high standards for understanding; Jón’s idea-generation and ability to critique (described as “fantastic at killing ideas”).
  - Productive but challenging coauthorship dynamic enhanced by marriage.
- Mentorship:
  - Demonstrated support for students transitioning into economics (example: PhD student David Bruns-Smith who switched from computer science).
  - Emphasis on substantive economic meaning over doctrinaire attachment to any formal framework.
- Intellectual habit:
  - Longstanding practice of “Question Assumptions,” inspired by a sign in Bo Honoré’s office at Princeton and later seen in Jim Powell’s office at Berkeley.

*Finance & Development — December 2022*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2022/december/people-in-economics.pdf_