Publications:
Teaching Production with SimCity BuildIt, Journal of Economics Teaching, Volume 11(1), 1-26, 2026.
Bank Bailouts: Moral Hazard and Commitment , Journal of Mathematical Economics, Volume 111, April 2024, 102939. (Best Paper In Financial Institutions Track at Southwestern Finance Association Conference 2020)
Monetary and Fiscal Coordination in Preventing Bank Failures and Financial Contagion, Journal of Macroeconomics, Volume 75, March 2023, 103498.
The Optimal Bailout Policy in an Interbank Network, Economics Letters, Volume 216, July 2022, 110628 .
Working Papers:
Benefit Cliffs in California Public Assistance (with Ali Mohammed Bazarah and Abigail Larsson) Submitted
Abstract: This paper examines the existence and effects of the economic phenomenon known as budget cliffs in California’s public assistance programs. Utilizing data from ACS and PUMS over the period of 5 years, and using Chow Regression Testing, this study aims to find quantifiable evidence that budget cliffs exist, specifically in California public assistance programs. The results from the Chow test provide robust evidence of a significant structural change in the relationship between independent variables and hours worked at key phase-out levels, rigorously validating the existence of these cliffs. This analysis reveals the income ranges in which the substantial decline in benefits may offset the increase in wages and earnings. A separate theoretical model is also introduced to validate the empirical findings, showing how individuals decide on hours worked when facing potential budget cliffs. With the identification of these budget cliffs, this paper provides the evidence to support policy reformation aimed at providing stability for individuals at phase-out income thresholds.
Bailout of Large Banks Submitted
Abstract: The model introduced in this paper investigates the effect of the size of large banks on economic welfare. The economy consists of a large bank and a measure of small banks making decisions on the riskiness of their asset portfolios with the expectation of bailout from the fiscal authority in case of a bad outcome. I show that the existence of such a large bank does not always reduce welfare, which is in contrast to notion of "too big to fail". Having a large bank in the economy can be welfare improving depending on its size and the social cost of bailout. This is mainly due to the increased political scrutiny of the bailout of the large bank that causes the large bank to indirectly and partially internalize the cost of its bailout.
Abstract: This paper reinforces a common opinion that bank bailouts create moral hazard by showing that bailouts foster excessive risk-taking behavior in banks. However, restricting bailouts altogether is also suboptimal as it forces banks to be overly conservative and forego the benefit that comes from the higher expected returns from risky investments. Therefore, restricting bailouts does not always dominate allowing bailouts and vice versa. However, allowing bailouts can become constrained efficient if implemented together with appropriate Pigouvian taxes. Additionally, if bailout policies can be precommitted ex ante, allowing bailouts can also be constrained efficient.
Works in Progress:
Credit Card Interchange Fees and Rewards as Regressive Taxation
Intrahousehold Dynamics on Job Demand and Turnover Intention: Theory and Evidence (with Youjeong Huh)
Opacity, Bailout, and Bank Fragility (with Ryuichiro Izumi)
Prospect Theory and Bank Fragility
Predicting Bank Failures Using Recurrent Neural Networks