25 Years IWH

Professor Dr Mathias Trabandt

Professor Dr Mathias Trabandt
Current Position

since 4/17

Research Fellow at the Department of Macroeconomics

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 8/15

Professor of Macroeconomics

Freie Universität Berlin

Research Interests

  • applied econometrics
  • labour economics
  • international macroeconomics

Mathias Trabandt is a Research Fellow at the IWH since April 2017. His fields of interest are macroeconomics, monetary economics, public economics, labour economics, international macroeconomics, financial frictions and applied econometrics.

Mathias Trabandt is a Professor of Macroeconomics at the School of Business and Economics at Freie Universität Berlin since August 2015. Before joining the School of Business and Economics, he was Chief of the “Global Modeling Studies Section” at the International Finance Division of the Federal Reserve Board of Governors in Washington D.C. Earlier in his career, Mathias Trabandt also held positions as an economist at the European Central Bank and Deutsche Bundesbank in Frankfurt and at Sveriges Riksbank in Stockholm. He received his PhD in economics from Humboldt University Berlin.

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Professor Dr Mathias Trabandt
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The Macroeconomic Risks of Undesirably Low Inflation

Mathias Trabandt Jonas Arias Christopher J. Erceg

in: European Economic Review , 2016


This paper investigates the macroeconomic risks associated with undesirably low inflation using a medium-sized New Keynesian model. We consider different causes of persistently low inflation, including a downward shift in long-run inflation expectations, a fall in nominal wage growth, and a favorable supply-side shock. We show that the macroeconomic effects of persistently low inflation depend crucially on its underlying cause, as well as on the extent to which monetary policy is constrained by the zero lower bound. Finally, we discuss policy options to mitigate these effects.

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Unemployment and Business Cycles

Mathias Trabandt Lawrence J. Christiano Martin S. Eichenbaum

in: Econometrica , No. 4, 2016


We develop and estimate a general equilibrium search and matching model that accounts for key business cycle properties of macroeconomic aggregates, including labor market variables. In sharp contrast to leading New Keynesian models, we do not impose wage inertia. Instead we derive wage inertia from our specification of how firms and workers negotiate wages. Our model outperforms a variant of the standard New Keynesian Calvo sticky wage model. According to our estimated model, there is a critical interaction between the degree of price stickiness, monetary policy, and the duration of an increase in unemployment benefits.

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Understanding the Great Recession

Mathias Trabandt Lawrence J. Christiano Martin S. Eichenbaum

in: American Economic Journal: Macroeconomics , No. 1, 2015


We argue that the vast bulk of movements in aggregate real economic activity during the Great Recession were due to financial frictions. We reach this conclusion by looking through the lens of an estimated New Keynesian model in which firms face moderate degrees of price rigidities, no nominal rigidities in wages, and a binding zero lower bound constraint on the nominal interest rate. Our model does a good job of accounting for the joint behavior of labor and goods markets, as well as inflation, during the Great Recession. According to the model the observed fall in total factor productivity and the rise in the cost of working capital played critical roles in accounting for the small drop in inflation that occurred during the Great Recession.

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