PDF C.V.
Education
Ph.D. - University of Oregon (2013)
B.S. in Economics and Mathematics - Westminster University (2008)
Current Positions
Senior Lecturer - University of Sydney 2018 - present
Past Positions
Global Professor (Guest) - Keio University 2023 Jun - Sep
Economic Research Advisor - Reserve Bank of Australia 2017 - 2023
Visiting Scholar - Bank of Finland 2019 Jan - Feb
Lecturer - UNSW Sydney 2013 - 2018
Visiting Economist - Reserve Bank of Australia 2016 - 2017
Graduate Teaching Fellow - University of Oregon 2008 - 2013
Publications
Evans G.W., Gibbs C.G. and McGough B., (forthcoming), "A unified model of learning to forecast." American Economic Journal: Macroeconomics
Online appendix
Gibbs C.G. and Andrey V., (forthcoming), "Conditionally Optimal Weights and Forward-Looking Approaches to Combining Forecasts", International Journal of Forecasting
Online appendix available here.
Gibbs C.G. and McClung N., (2023), "Does my model predict a forward guidance puzzle?" Review of Economic Dynamics, 51, 393-423
Code to replicate the figures in the text and reproduce the analysis found in the paper may be downloaded here.
Gelfer, S., & Gibbs, C. G., 2023. Measuring the effects of large-scale asset purchases: The role of international financial markets and the financial
accelerator. Journal of International Money and Finance, 131, 102791.
Gibbs, C.G., Nodari, G. and Hambur J., 2021 "Housing and Commodity Investment Booms in a Small Open-Economy," Economic Record, v. 97, no. 317, 212-242
RBA Research Discussion Paper from 2018. Replication files may also be downloaded from the RBA's website.
Gibbs, C.G., 2018, "Learning to Believe in Secular Stagnation," Economics Letters. 163(2), 50-54
Appendix B explores the E-stability properties of the liquidity trap equilibrium of Schmitt-Grohe and Uribe (2016)
Cuffe, H.E. and Gibbs C.G., 2017, "The Effect of Payday Lending Restrictions on Liquor Sales," Journal of Banking & Finance, 85(12), 132-145,
Media coverage: Washington Post, Economist's View, BusinessThink
SSRN Top Ten download list for ERN: Urban Economics & Public Policy and ERN: Other Microeconomics: Intertemporal Consumer Choice & Savings
Gibbs, C.G. and Kulish, M., 2017, "Disinflations in a model of imperfectly anchored expectations," European Economic Review, 100(11), 157-174
Online appendix. Replication files.
Gibbs, C.G., 2017, "Forecast combination, non-linear dynamics, and the macroeconomy," Economic Theory, 63(3), 653-686
DOI 10.1007/s00199-016-0951-x
Mathematica files containing the proofs for Lemma 1 and Lemma 2; Files to replicate key results for the Lucas monetary model and the Fisherian model.
Working paper version available here.
Grants
ARC Discover Project 210101204, "Economic Policy when Interest Rates are Zero," $329,706
Joint with Bruce Preston (University of Melbourne) and Stefano Eusepi (University of Texas)
Working Papers
Resolving New Keynesian Puzzles - with Maria Eskelinen (Oxford) and Nigel McClung (Bank of Finland)
Abstract: New Keynesian models generate puzzles when confronted with the zero lower bound (ZLB) on nominal interest rates (e.g. the forward guidance puzzle or the paradox of flexibility). We show that these puzzles are absent in simple and medium-scale models when monetary policy approximates optimal policy, even loosely. The standard approach to modeling monetary policy at the ZLB does not approximate the policy a rational inflation targeting central bank would choose at the ZLB. It is this disconnect that is responsible for the puzzles. The puzzles, therefore, are best thought of as the plausible predictions of implausible monetary policy rather than implausible predictions to plausible monetary policy. We show how to write monetary policy rules that capture the same policy objective with and without the ZLB.
Monetary Policy Trade-offs at the Zero Lower Bound - with Stefano Eusepi (UT - Austin) and Bruce Preston (University of Melbourne)
This is new draft (March 2022). A previous draft circulated under the title "Forward Guidance with Unanchored Expectations." Technical Appendix
Abstract: We study zero interest-rate policy in response to a large negative demand shock when long-run expectations can fall over time. Because falling expectations make monetary policy less effective by raising real interest rates, the optimal forward guidance policy makes large front-loaded promises to stabilize expectations. Policy is too stimulatory in the event of transitory shocks, but provides insurance against persistent shocks. The optimal policy is well-approximated by a constant calendar-based forward guidance, independent of the shock’s realised persistence. This insurance principle qualitatively and quantitatively distinguishes our paper from other recent research on bounded rationality and the forward guidance puzzle.
Expectations and the Empirical Fit of DSGE Models - with Eric Gaus (Haverford College) - (2020)
Abstract: This paper studies the improvement in empirical fit of dynamic stochastic general equilibrium (DSGE) models that assume adaptive learning in lieu of rational expectations (RE). The literature finds that estimated DSGE models with adaptive learning generate near universal improvements in fit, while inference on structural parameters is mostly unchanged. Improvements are attributed to the increased persistence generated by backward-looking expectations. We show, however, that improvements often result from altered cross-equation restrictions and not additional persistence assumptions. Nested comparisons of Euler-equation and infinite-horizon adaptive learning both significantly improve upon RE but only the latter's improvements are due to expectation formation. Bounded rationality assumptions offer an intuitive way to improve both in-sample and out-of-sample DSGE model fit. But our results suggest that learning models best-capture persistent deviation in beliefs from fundamentals rather than temporary deviations at business cycle frequencies.
Strongly Rational Routes to Randomness - (2016)
Abstract: Many behavioral models of expectation formation in macroeconomics and finance assume agents choose from a menu of predictor rules over time to construct forecasts. The menus often include a costly rational predictor that yields a correct prediction taking into account the heterogeneity of expectations. In this paper, I study the eductive justification of this rational predictor in the sense of Guesnerie (2002). I show that the condition for eductive stability is strictly weaker than in the homogeneous expectations case under commonly held assumptions. This implies that many rational routes to randomness identified by Brock and Hommes (1997) are actually strongly rational and that rational forecasting behavior is not necessarily ruled out when eductive stability in the homogeneous expectations case fails. The latter has implications for when rational behavior may occur in laboratory experiments on expectations.
Work in Progress
"Do low interest rates predict financial crises?'' - with Tristan Truuvert (University of Sydney)
Book Reviews
Gibbs, C. G. (2022) Fully Grown: Why a Stagnant Economy is a Sign of Success, by Dietrich Vollrath, Economic Record, v. 98, no. 322, 322-324
Conference Presentations
Ozmac - Monash University (2023)
Econometric Society Australasian Meetings - UNSW Sydney (2023)
Virtual Australian Macroeconomics Seminar Workshop (in person) - University of Sydney (2022)
Workshop of Australasian Macroeconomic Society - University of Sydney (2022)
Continuing Education in Macroeconomics Workshop - Monash University (2022)
Barcelona Summer Forum: Expectations in Dynamic Macroeconomic Models Conference (2022)
Expectations in Dynamic Macroeconomic Models Conference - Czech National Bank (2021)
Workshop of the Sydney Macro Reading Group - Reserve Bank of Australia (2019)
Symposium of the Society for Nonlinear Dynamics and Econometrics - FRB Dallas, USA (2019)
Expectations in Dynamic Macroeconomic Models Conference - University of Birmingham (2018)
Symposium of the Society for Nonlinear Dynamics and Econometrics - Tokyo, Japan (2018)
WEAI Conference - San Diego, CA (2017)
Symposium of the Society for Nonlinear Dynamics and Econometrics - Paris, France (2017)
Workshop of the Sydney Macro Reading Group - University of Sydney (2016)
Workshop of the Australasian Macroeconomic Society - UNSW Australia (2015)
Expectations in Dynamic Macroeconomic Models Conference - University of Oregon (2015)
Continuing Education in Macroeconomics - University of Tasmania (2014)
Symposium of the Society for Nonlinear Dynamics and Econometrics - NY, NY (2014)
Continuing Education in Macroeconomics - UNSW, Sydney NSW (2013)
Expectations in Dynamic Macroeconomic Models Conference - Federal Reserve Bank of San Francisco (2013)
Canadian Economic Association Meetings - HEC Montreal (2013)
32th Annual International Symposium on Forecasting - Boston, MA (2012)
Served as Referee for
Journal of Political Economy
Review of Economic Dynamics
European Economic Review
Journal of Banking & Finance
Journal of International Money and Finance
Journal of Money Credit & Banking
Journal of Economic Behavior and Organization
Macroeconomic Dynamics
International Journal of Central Banking
Journal of Economic Dynamics and Control
Economic Inquiry
Studies in Nonlinear Dynamics and Econometrics
Journal of Macroeconomics
Journal of Economic Surveys
Economic Record
Education
Ph.D. - University of Oregon (2013)
B.S. in Economics and Mathematics - Westminster University (2008)
Current Positions
Senior Lecturer - University of Sydney 2018 - present
Past Positions
Global Professor (Guest) - Keio University 2023 Jun - Sep
Economic Research Advisor - Reserve Bank of Australia 2017 - 2023
Visiting Scholar - Bank of Finland 2019 Jan - Feb
Lecturer - UNSW Sydney 2013 - 2018
Visiting Economist - Reserve Bank of Australia 2016 - 2017
Graduate Teaching Fellow - University of Oregon 2008 - 2013
Publications
Evans G.W., Gibbs C.G. and McGough B., (forthcoming), "A unified model of learning to forecast." American Economic Journal: Macroeconomics
Online appendix
Gibbs C.G. and Andrey V., (forthcoming), "Conditionally Optimal Weights and Forward-Looking Approaches to Combining Forecasts", International Journal of Forecasting
Online appendix available here.
Gibbs C.G. and McClung N., (2023), "Does my model predict a forward guidance puzzle?" Review of Economic Dynamics, 51, 393-423
Code to replicate the figures in the text and reproduce the analysis found in the paper may be downloaded here.
Gelfer, S., & Gibbs, C. G., 2023. Measuring the effects of large-scale asset purchases: The role of international financial markets and the financial
accelerator. Journal of International Money and Finance, 131, 102791.
Gibbs, C.G., Nodari, G. and Hambur J., 2021 "Housing and Commodity Investment Booms in a Small Open-Economy," Economic Record, v. 97, no. 317, 212-242
RBA Research Discussion Paper from 2018. Replication files may also be downloaded from the RBA's website.
Gibbs, C.G., 2018, "Learning to Believe in Secular Stagnation," Economics Letters. 163(2), 50-54
Appendix B explores the E-stability properties of the liquidity trap equilibrium of Schmitt-Grohe and Uribe (2016)
Cuffe, H.E. and Gibbs C.G., 2017, "The Effect of Payday Lending Restrictions on Liquor Sales," Journal of Banking & Finance, 85(12), 132-145,
Media coverage: Washington Post, Economist's View, BusinessThink
SSRN Top Ten download list for ERN: Urban Economics & Public Policy and ERN: Other Microeconomics: Intertemporal Consumer Choice & Savings
Gibbs, C.G. and Kulish, M., 2017, "Disinflations in a model of imperfectly anchored expectations," European Economic Review, 100(11), 157-174
Online appendix. Replication files.
Gibbs, C.G., 2017, "Forecast combination, non-linear dynamics, and the macroeconomy," Economic Theory, 63(3), 653-686
DOI 10.1007/s00199-016-0951-x
Mathematica files containing the proofs for Lemma 1 and Lemma 2; Files to replicate key results for the Lucas monetary model and the Fisherian model.
Working paper version available here.
Grants
ARC Discover Project 210101204, "Economic Policy when Interest Rates are Zero," $329,706
Joint with Bruce Preston (University of Melbourne) and Stefano Eusepi (University of Texas)
Working Papers
Resolving New Keynesian Puzzles - with Maria Eskelinen (Oxford) and Nigel McClung (Bank of Finland)
Abstract: New Keynesian models generate puzzles when confronted with the zero lower bound (ZLB) on nominal interest rates (e.g. the forward guidance puzzle or the paradox of flexibility). We show that these puzzles are absent in simple and medium-scale models when monetary policy approximates optimal policy, even loosely. The standard approach to modeling monetary policy at the ZLB does not approximate the policy a rational inflation targeting central bank would choose at the ZLB. It is this disconnect that is responsible for the puzzles. The puzzles, therefore, are best thought of as the plausible predictions of implausible monetary policy rather than implausible predictions to plausible monetary policy. We show how to write monetary policy rules that capture the same policy objective with and without the ZLB.
Monetary Policy Trade-offs at the Zero Lower Bound - with Stefano Eusepi (UT - Austin) and Bruce Preston (University of Melbourne)
This is new draft (March 2022). A previous draft circulated under the title "Forward Guidance with Unanchored Expectations." Technical Appendix
Abstract: We study zero interest-rate policy in response to a large negative demand shock when long-run expectations can fall over time. Because falling expectations make monetary policy less effective by raising real interest rates, the optimal forward guidance policy makes large front-loaded promises to stabilize expectations. Policy is too stimulatory in the event of transitory shocks, but provides insurance against persistent shocks. The optimal policy is well-approximated by a constant calendar-based forward guidance, independent of the shock’s realised persistence. This insurance principle qualitatively and quantitatively distinguishes our paper from other recent research on bounded rationality and the forward guidance puzzle.
Expectations and the Empirical Fit of DSGE Models - with Eric Gaus (Haverford College) - (2020)
Abstract: This paper studies the improvement in empirical fit of dynamic stochastic general equilibrium (DSGE) models that assume adaptive learning in lieu of rational expectations (RE). The literature finds that estimated DSGE models with adaptive learning generate near universal improvements in fit, while inference on structural parameters is mostly unchanged. Improvements are attributed to the increased persistence generated by backward-looking expectations. We show, however, that improvements often result from altered cross-equation restrictions and not additional persistence assumptions. Nested comparisons of Euler-equation and infinite-horizon adaptive learning both significantly improve upon RE but only the latter's improvements are due to expectation formation. Bounded rationality assumptions offer an intuitive way to improve both in-sample and out-of-sample DSGE model fit. But our results suggest that learning models best-capture persistent deviation in beliefs from fundamentals rather than temporary deviations at business cycle frequencies.
Strongly Rational Routes to Randomness - (2016)
Abstract: Many behavioral models of expectation formation in macroeconomics and finance assume agents choose from a menu of predictor rules over time to construct forecasts. The menus often include a costly rational predictor that yields a correct prediction taking into account the heterogeneity of expectations. In this paper, I study the eductive justification of this rational predictor in the sense of Guesnerie (2002). I show that the condition for eductive stability is strictly weaker than in the homogeneous expectations case under commonly held assumptions. This implies that many rational routes to randomness identified by Brock and Hommes (1997) are actually strongly rational and that rational forecasting behavior is not necessarily ruled out when eductive stability in the homogeneous expectations case fails. The latter has implications for when rational behavior may occur in laboratory experiments on expectations.
Work in Progress
"Do low interest rates predict financial crises?'' - with Tristan Truuvert (University of Sydney)
Book Reviews
Gibbs, C. G. (2022) Fully Grown: Why a Stagnant Economy is a Sign of Success, by Dietrich Vollrath, Economic Record, v. 98, no. 322, 322-324
Conference Presentations
Ozmac - Monash University (2023)
Econometric Society Australasian Meetings - UNSW Sydney (2023)
Virtual Australian Macroeconomics Seminar Workshop (in person) - University of Sydney (2022)
Workshop of Australasian Macroeconomic Society - University of Sydney (2022)
Continuing Education in Macroeconomics Workshop - Monash University (2022)
Barcelona Summer Forum: Expectations in Dynamic Macroeconomic Models Conference (2022)
Expectations in Dynamic Macroeconomic Models Conference - Czech National Bank (2021)
Workshop of the Sydney Macro Reading Group - Reserve Bank of Australia (2019)
Symposium of the Society for Nonlinear Dynamics and Econometrics - FRB Dallas, USA (2019)
Expectations in Dynamic Macroeconomic Models Conference - University of Birmingham (2018)
Symposium of the Society for Nonlinear Dynamics and Econometrics - Tokyo, Japan (2018)
WEAI Conference - San Diego, CA (2017)
Symposium of the Society for Nonlinear Dynamics and Econometrics - Paris, France (2017)
Workshop of the Sydney Macro Reading Group - University of Sydney (2016)
Workshop of the Australasian Macroeconomic Society - UNSW Australia (2015)
Expectations in Dynamic Macroeconomic Models Conference - University of Oregon (2015)
Continuing Education in Macroeconomics - University of Tasmania (2014)
Symposium of the Society for Nonlinear Dynamics and Econometrics - NY, NY (2014)
Continuing Education in Macroeconomics - UNSW, Sydney NSW (2013)
Expectations in Dynamic Macroeconomic Models Conference - Federal Reserve Bank of San Francisco (2013)
Canadian Economic Association Meetings - HEC Montreal (2013)
32th Annual International Symposium on Forecasting - Boston, MA (2012)
Served as Referee for
Journal of Political Economy
Review of Economic Dynamics
European Economic Review
Journal of Banking & Finance
Journal of International Money and Finance
Journal of Money Credit & Banking
Journal of Economic Behavior and Organization
Macroeconomic Dynamics
International Journal of Central Banking
Journal of Economic Dynamics and Control
Economic Inquiry
Studies in Nonlinear Dynamics and Econometrics
Journal of Macroeconomics
Journal of Economic Surveys
Economic Record