## Questioning Assumptions

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**Canonical URL:** [Questioning Assumptions](https://www.imf.org/en/publications/fandd/issues/2022/12/pie-questioning-assumptions-emi-nakamura)

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## Bibliographic details
- Authors: PETER J WALKER
- Published: December 1, 2022

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### Profile and background
- Subject: Emi Nakamura, professor of economics at the University of California, Berkeley.
- Personal background:
  - Grew up in Alberta, Canada.
  - One of her favorite movies as a child was the 1987 docudrama The Race for the Double Helix.
  - Described as a 42-year-old in the profile.
  - Married to Jón Steinsson, fellow Berkeley economics professor; they met as undergraduates at Princeton.
  - Parents Alice and Masao Nakamura are economists at the University of Alberta and the University of British Columbia, respectively.
- 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 her research on fiscal stimulus and price stickiness.”

### Research approach and methods
- Core methodology: using micro data (data on individual people, households, and businesses) to answer macroeconomic questions and improve causal identification.
- Rationale: “There often aren’t enough data points in the macro data to make convincing arguments about causality. Looking at micro data is a natural way to expand the data set.”
- Typical research traits:
  - Painstaking attention to data and melding of theory with empirical methods.
  - Distinguishing temporary phenomena (e.g., sales) from regular behavior in micro records.
  - Willingness to undertake onerous data collection (e.g., custom microfilm conversion).

### Price stickiness and inflation findings
- Key studies and findings:
  - Bils and Klenow (2004) earlier finding: half of prices lasting less than 4.3 months; used an extract of Bureau of Labor Statistics (BLS) micro data for two years, 1995–97.
  - Nakamura and Steinsson’s “Five Facts about Prices” (2008):
    - Used actual BLS micro data expanded to cover 1988 to 2005.
    - By separating temporary sales from regular pricing, they found regular prices were stickier than Bils and Klenow estimated.
    - Observation: “Prices changed much more frequently in times of high inflation.”
  - “The Elusive Costs of Inflation” (2018):
    - Examined the higher-inflation period between 1977 and 1988.
    - Confirmed that regular prices were adjusted more frequently in periods of higher inflation.
  - “The Slope of the Phillips Curve” (2022):
    - Originated from analysis by the Macro Policy Lab.
    - Using data going back to 1978, the authors find that the slope of the Phillips curve is small—and has gotten only modestly smaller since the early 1980s.
    - Implication: the early 1980s disinflation was less about higher unemployment and more about anchored inflation expectations under the new monetary regime instituted by Federal Reserve Chairman Paul Volcker.
- Policy-relevant implications:
  - Accurate monitoring of economy-wide price changes requires distinguishing sales from regular price movements.
  - Maintaining long-term inflation expectations and confidence in the monetary regime is “key” when central banks attempt to rein in inflation while growth dwindles.

### Fiscal stimulus and other empirical contributions
- “Fiscal Stimulus in a Monetary Union” (2014):
  - Focused on US military spending variation across regions to estimate fiscal multipliers within a common monetary and tax policy environment.
  - Analyzed 40 years of military purchases (including repairs and purchases of new aircraft carriers).
  - Found evidence that fiscal multipliers “could be large,” indicating fiscal stimulus can significantly boost growth.
- “The Gift of Moving” (2022):
  - Natural experiment from Iceland’s Westman Islands volcanic eruption on January 23, 1973.
  - Tracked parents and children over the subsequent 34 years using detailed Icelandic data on income, education, and genealogical linkages.
  - Findings:
    - Children who moved had higher levels of education and earnings than if they had stayed.
    - Parents of movers earned slightly less, suggesting large parental costs that may discourage moves and act as barriers to social mobility.
  - Noted that moves often involved relocating to lower-income areas, yet children’s life outcomes improved when skills matched local opportunities (e.g., fishing industry).

### Collaboration, mentorship, and working style
- Partnership with Jón Steinsson:
  - Complementary skills: Nakamura’s meticulousness and high standards for understanding; Steinsson’s idea generation and critical evaluation.
  - Frequent coauthorship; the relationship strengthens research through rigorous critique.
- Family and cross-generational collaboration:
  - Regular coauthorship and intellectual exchange with economist parents Alice and Masao Nakamura.
- Mentorship:
  - Known for fostering constructive partnerships with PhD students; example: support for David Bruns-Smith when he switched from computer science to economics.
  - Emphasis on substantive economic meaning over dogmatic attachment to formal frameworks.

### Current and future work
- Ongoing projects include studies of:
  - How exchange rate depreciations affect economic activity.
  - The economic effects of unemployment insurance extensions.
  - The impact of seasonal adjustment methods used for government statistics.

*Peter J. Walker. F&D Magazine. December 2022.*

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## Content in this bundle

- **Questioning Assumptions: Emi Nakamura profile**
  - [Questioning Assumptions: Emi Nakamura profile (Markdown version)](/-/media/files/publications/fandd/article/2022/december/people-in-economics.pdf.md){rel="alternate" type="text/markdown"}
  - [Questioning Assumptions: Emi Nakamura profile (PDF)](/-/media/files/publications/fandd/article/2022/december/people-in-economics.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/fandd/issues/2022/12/pie-questioning-assumptions-emi-nakamura_