Matias Bayas-Erazo

Matias Bayas-Erazo

PhD student in Economics

Northwestern University


I am a Ph.D. candidate in Economics at Northwestern University, interested in macroeconomics and optimal taxation.

I will be on the 2023/2024 job market.

  • Macroeconomics
  • Optimal taxation
  • PhD in Economics, 2024 (expected)

    Northwestern University

  • MSc Econometrics and Mathematical Economics, 2017

    London School of Economics

  • Master 1 in Economics, 2016

    Toulouse School of Economics

  • BA in Economics, 2014

    University of Virginia

Working papers

The Joint Dynamics of Labour and Capital

with Fergal Hanks

Models of lumpy capital adjustment are too responsive to interest rates relative to empirical evidence. We argue that allowing for small convex adjustment costs in labour can help these models better match the data. Convex costs cause labour to increase slowly in response to a shock thus smoothing out the impact on the marginal product of capital. Due to both depreciation and uncertainty over future productivity, this delay in the benefits of additional capital can have a large impact on the responsiveness of capital investment.

Work in progress

Optimal Taxation with Rational Inattention

with George-Marios Angeletos

We study optimal taxation when agents are rationally inattentive. Using a flexible model of inattention, we show that there is no corrective role for taxes when attention costs satisfy an invariance condition. At the same time, some forms of inattention generate inter-dependence across states– tax decisions in one state are no longer independent of those in other states. This coupling arises because an inattentive demand function depends on the price of goods in multiple states of the world. In contrast to the traditional view, inter-dependence may call for lower tax rates. In addition, it breaks Slutsky matrix symmetry and can justify state-dependent taxation. Finally, we clarify how traditional estimates of elasticities and welfare costs of taxation may be biased when agents are inattentive.

Tariffs and Current Account Deficits
with Guido Lorenzoni