Lukas Hack

Welcome!

I am a Post-Doctoral Researcher at ETH Zürich and at the University of Mannheim. I received a doctoral degree from the University of Mannheim in 2024. My main research fields are macroeconomics, monetary economics, economic history and public economics.

Curriculum Vitae

News and Upcoming Talks

New paper: Which Macroeconomic News Matters for Price-Setting?

New paper: Progressive Income Taxation and Inflation: The Macroeconomic Effects of Bracket Creep

New paper: Loanly Governments: Sovereign Debt in the Wake of Credit Rating Downgrades

New policy article: The Effects of the Constitutional Court Ruling on Public Investment in Germany

Next talks: SSES Conference, Zurich (June 26/27), and Public Finance Workshop, Mannheim (July 11)

Working Papers:

Identification of Systematic Monetary Policy [abstract]
(with Klodiana Istrefi and Matthias Meier, December 2023)
Review of Economic Studies, revise and resubmit

Abstract
We propose a novel identification design to estimate the causal effects of systematic monetary policy on the propagation of macroeconomic shocks. The design combines (i)~a time-varying measure of systematic monetary policy based on the historical composition of hawks and doves in the Federal Open Market Committee (FOMC) with (ii) an instrument that leverages the mechanical FOMC rotation of voting rights. We apply our design to study the effects of government spending shocks. We find fiscal multipliers between two and three when the FOMC is dovish and below zero when it is hawkish. Narrative evidence from historical FOMC records corroborates our findings.

Abstract

We propose a novel identification design to estimate the causal effects of systematic monetary policy on the propagation of macroeconomic shocks. The design combines (i)~a time-varying measure of systematic monetary policy based on the historical composition of hawks and doves in the Federal Open Market Committee (FOMC) with (ii) an instrument that leverages the mechanical FOMC rotation of voting rights. We apply our design to study the effects of government spending shocks. We find fiscal multipliers between two and three when the FOMC is dovish and below zero when it is hawkish. Narrative evidence from historical FOMC records corroborates our findings.

[CEPR DP] [ECB WP] [Ungated] [Vox EU] [ECB Research Bulletin] [SUERF Policy Brief] [BibTex]

The Systematic Origins of Monetary Policy Shocks [abstract]
(with Klodiana Istrefi and Matthias Meier, February 2025)

Abstract
Conventional strategies to identify monetary policy shocks rest on the implicit assumption that systematic monetary policy is time-invariant. In an environment with time-varying systematic monetary policy, we formally show that these strategies yield shocks that are contaminated, leading to bias in estimated impulse responses. In line with our theoretical results, we empirically show that conventional monetary policy shocks are predictable by measured fluctuations in systematic monetary policy. We propose new shocks that are purged of this predictability. Our preferred new shocks show that U.S.~monetary policy affects inflation and output more strongly and faster compared to the corresponding conventional shocks.

Abstract

Conventional strategies to identify monetary policy shocks rest on the implicit assumption that systematic monetary policy is time-invariant. In an environment with time-varying systematic monetary policy, we formally show that these strategies yield shocks that are contaminated, leading to bias in estimated impulse responses. In line with our theoretical results, we empirically show that conventional monetary policy shocks are predictable by measured fluctuations in systematic monetary policy. We propose new shocks that are purged of this predictability. Our preferred new shocks show that U.S.~monetary policy affects inflation and output more strongly and faster compared to the corresponding conventional shocks.

[CEPR DP] [Ungated] [BibTex]

Which Macroeconomic News Matters for Price-Setting? [abstract] (with Davud Rostam-Afschar, May 2025)

Abstract
We examine how macroeconomic news affects firms’ extensive-margin price-setting plans in a survey that we rolled out with randomized daily invitations. These plans predict future realized inflation. Using a high-frequency event study framework, we find that inflation and employment surprises imply significant and sizable revisions in firms’ pricing plans. There is a limited role for news about the trade balance, but no significant role for other commonly studied data releases, e.g., industrial production. We also study news coverage and agents’ news search behavior, finding that the intensive-margin response of media coverage and news search may partly drive our main results.

Abstract

We examine how macroeconomic news affects firms’ extensive-margin price-setting plans in a survey that we rolled out with randomized daily invitations. These plans predict future realized inflation. Using a high-frequency event study framework, we find that inflation and employment surprises imply significant and sizable revisions in firms’ pricing plans. There is a limited role for news about the trade balance, but no significant role for other commonly studied data releases, e.g., industrial production. We also study news coverage and agents’ news search behavior, finding that the intensive-margin response of media coverage and news search may partly drive our main results.

[Ungated] [IZA DP] [SSRN] [BibTex]

Understanding Firm Dynamics with Daily Data [abstract]
(with Davud Rostam-Afschar, January 2025)

Abstract
How do firms’ plans and expectations respond to macroeconomic shocks? We run a daily survey of German firms over the past three years. We randomize daily invitations, delivering a stable composition of firms. This allows constructing daily time series and estimating dynamic aggregate causal effects. These estimates capture firms’ responsiveness conditional on the recent economic environment, making them informative for policymakers. We examine oil supply, monetary policy, and forward guidance shocks, finding that firms’ plans, especially price-setting plans, respond within days to oil supply and monetary policy shocks but not to forward guidance. Finally, we investigate firm heterogeneity and expectations.

Abstract

How do firms’ plans and expectations respond to macroeconomic shocks? We run a daily survey of German firms over the past three years. We randomize daily invitations, delivering a stable composition of firms. This allows constructing daily time series and estimating dynamic aggregate causal effects. These estimates capture firms’ responsiveness conditional on the recent economic environment, making them informative for policymakers. We examine oil supply, monetary policy, and forward guidance shocks, finding that firms’ plans, especially price-setting plans, respond within days to oil supply and monetary policy shocks but not to forward guidance. Finally, we investigate firm heterogeneity and expectations.

[Ungated] [CRC DP] [IZA DP] [SSRN] [Online Supplement] [BibTex] [Daily Business Database]

Progressive Income Taxation and Inflation: The Macroeconomic Effects of Bracket Creep [abstract] (May 2025)

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Abstract
Under nominal progressive taxation, inflation drives up tax rates if the schedule is not adjusted, leading to bracket creep. To isolate bracket creep from other sources of tax rate changes, I propose a non-parametric decomposition approach. Applying the decomposition to German administrative tax records, I find sizeable bracket creep episodes. While the overall importance of bracket creep has decreased over time due to institutional changes, the post-Covid inflation surge led to a resurgence. Theoretically, I show how bracket creep affects labor supply decisions in a partial equilibrium framework and estimate a theory-consistent measure of bracket creep, the indexation gap, which is used to discipline a New Keynesian model with incomplete markets. The model predicts that bracket creep leads to a transitory steepening of the Phillips curve arising endogenously in response to a monetary shock. Such a steepening may alleviate the output costs of monetary disinflation.

Abstract

Under nominal progressive taxation, inflation drives up tax rates if the schedule is not adjusted, leading to bracket creep. To isolate bracket creep from other sources of tax rate changes, I propose a non-parametric decomposition approach. Applying the decomposition to German administrative tax records, I find sizeable bracket creep episodes. While the overall importance of bracket creep has decreased over time due to institutional changes, the post-Covid inflation surge led to a resurgence. Theoretically, I show how bracket creep affects labor supply decisions in a partial equilibrium framework and estimate a theory-consistent measure of bracket creep, the indexation gap, which is used to discipline a New Keynesian model with incomplete markets. The model predicts that bracket creep leads to a transitory steepening of the Phillips curve arising endogenously in response to a monetary shock. Such a steepening may alleviate the output costs of monetary disinflation.

[Ungated] [SSRN] [FAZ Media Coverage (German)] [Reinhard Selten Award] [BibTex]

Loanly Governments: Sovereign Debt in the Wake of Credit Rating Downgrades [abstract] (with Lukas Diebold, May 2025)

Abstract
This paper studies the funding structure of governments, examining financing beyond traditional sovereign bond markets. We document significant heterogeneity in the use of bonds and loans, and in the composition of foreign and domestic creditors. We relate this heterogeneity to sovereign credit ratings and present three key findings. First, sovereigns adjust the composition of financing instruments when credit ratings change. Second, not all rating changes and countries are alike. We find strong evidence for substitution from bonds to loans only when (i) credit ratings decrease for (ii) countries that have been rated sufficiently low. Third, the substitution toward loans is primarily financed through the domestic financial sector via foreign funds, and associated with a subsequent increase in financial distress, raising financial stability concerns. Finally, we show that the documented loan-bond substitution is also accompanied by a reduction in real GDP, primarily driven by a decline in investment, suggesting real adverse consequences.

Abstract

This paper studies the funding structure of governments, examining financing beyond traditional sovereign bond markets. We document significant heterogeneity in the use of bonds and loans, and in the composition of foreign and domestic creditors. We relate this heterogeneity to sovereign credit ratings and present three key findings. First, sovereigns adjust the composition of financing instruments when credit ratings change. Second, not all rating changes and countries are alike. We find strong evidence for substitution from bonds to loans only when (i) credit ratings decrease for (ii) countries that have been rated sufficiently low. Third, the substitution toward loans is primarily financed through the domestic financial sector via foreign funds, and associated with a subsequent increase in financial distress, raising financial stability concerns. Finally, we show that the documented loan-bond substitution is also accompanied by a reduction in real GDP, primarily driven by a decline in investment, suggesting real adverse consequences.

[Ungated] [SSRN] [BibTex]

Work in progress:

Transmission of Monetary Policy in a Currency Area with Heterogeneous Households
(with Hannes Twieling)

Abstract
working paper coming soon