Jonathan Heathcote

@heathcote.bsky.social

2.7K followers 660 following 29 posts

Economist. Macro, inequality, public finance, international finance, asset pricing, labor.
https://www.jonathanheathcote.com

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Economics 69%

Business 16%

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Reposted by Jonathan Heathcote

Sergio Ocampo @socampdi.bsky.social · Oct 8

🚨We are Hiring at the University of Western Ontario🚨

We have 3️⃣ tenure-track positions:
•2 Open-Field
•1 linked to our Masters in Financial Economics (open to various fields)

Come work with us in 🇨🇦! Share with your students!

📄 Open-Field uwo.ca/facultyrelat...
📄 MFE Position uwo.ca/facultyrelat...

uwo.ca

Reposted by Jonathan Heathcote, Tore Ellingsen

Rohit Lamba @rohitlamba.bsky.social · Jan 10

Week 2: This week's theory paper in focus is a brilliant conceptual puzzle piece by Thomas & Worrall (1990). What are the implications of risk sharing/insurance provision over time when income is private? They have a surprising answer: it necessarily leads to long-term impoverishment.

Jonathan Heathcote @heathcote.bsky.social · Apr 6

Longer time series for perspective.

Jonathan Heathcote @heathcote.bsky.social · Feb 11

Then we ask whether the observed path for investment is consistent with the required return to capital investment being equal, date by date, to the expected return estimated from the finance model. We find that it is, given a plausible path for expected productivity growth. 8/

Jonathan Heathcote @heathcote.bsky.social · Feb 11

We compare the time series for expected returns from our finance model with a series for realized returns to capital estimated from our macro model (given time series for taxes, depreciation, labor’s share of value-added etc). The two track closely. 7/

Jonathan Heathcote @heathcote.bsky.social · Feb 11

Why do we find this? Part of the explanation is that our macro-model consistent firm income measure — free cash flow — looks quite different to dividends paid. At low frequency, valuations and free cash flow clearly co-move, pointing to a link between the two.6/

Jonathan Heathcote @heathcote.bsky.social · Feb 11

The paper’s first result is that our estimated asset pricing model interprets fluctuations in valuations quite differently. We find that fluctuations over the past 100 years mostly reflect fluctuations in long run expected free cash flow! (x in the plot below) 5/

Jonathan Heathcote @heathcote.bsky.social · Feb 11

On top of that, conventional wisdom in finance is that volatility in valuations mostly reflects fluctuations in the expected return that firm owners require (rather than time variation in expected cash flow). If firm owners’ required returns are volatile, why is their capital invested so smooth? 4/

Jonathan Heathcote @heathcote.bsky.social · Feb 11

Valuations are volatile, while the aggregate capital stock is smooth. That poses a challenge to reconciling macro and finance. 3/

Jonathan Heathcote @heathcote.bsky.social · Feb 11

We study valuations of US corporations from 1929 onward using 2 models: an asset pricing model, and a stochastic growth model that incorporates factorless income. We fit these models to data from the Integrated Macroeconomic Accounts, focusing on free cash flow as a measure of income. 2/

Jonathan Heathcote @heathcote.bsky.social · Feb 11

New working paper with Andy Atkeson and Fabrizio Perri. A thread 1/ www.nber.org/papers/w33459

Reconciling Macroeconomics and Finance for the U.S. Corporate Sector: 1929 to Present

Founded in 1920, the NBER is a private, non-profit, non-partisan organization dedicated to conducting economic research and to disseminating research findings among academics, public policy makers, an...

www.nber.org

Jonathan Heathcote @heathcote.bsky.social · Jan 14

The housing supply is not fixed in the short run. There are lots of people who could rent out second homes, ADUs, or put property on AirBnb, if they felt it would be worthwhile financially.

Jonathan Heathcote @heathcote.bsky.social · Jan 13

Relatedly:

Jonathan Heathcote @heathcote.bsky.social · Jan 12

I suspect low US taxes and agglomeration effects are big drivers of US dynamism. With respect specifically to Finland, Nokia screwed up.

Jonathan Heathcote @heathcote.bsky.social · Jan 12

They did have access to venture capital — ie some other rich people. But that seems to also exist to some extent in Scandinavia (I watched The Playlist!)

Jonathan Heathcote @heathcote.bsky.social · Jan 12

@fatihguvenen.bsky.social is arguing that entrepreneurs need to have skin in the game (i.e they need wealth so they can have an equity stake). That makes sense But many of the richest Americans are self-made — they built big businesses without much initial wealth.

Reposted by Catherine C. Eckel, Matthias Doepke, Alberto Bisin , and 10 more Catherine C. Eckel, Matthias Doepke, Alberto Bisin, Jon H. Fiva, Dominic Nyhuis, Tayfun Sönmez, Michael A. Goldstein, Ioana Marinescu, Micaël Castanheira, Jonathan Heathcote, Winston T. Lin, Mike Kestemont, Michael E. Rose

Ben Golub @bengolub.bsky.social · Dec 24

In economics, editors, referees, and authors often behave as if a published paper should reflect some kind of authoritative consensus.

As a result, valuable debate happens in secret, and the resulting paper is an opaque compromise with anonymous co-authors called referees.

1/

Jonathan Heathcote @heathcote.bsky.social · Dec 14

And what is the answer?

Jonathan Heathcote @heathcote.bsky.social · Dec 10

Macro without macro.

Reposted by Jonathan Heathcote

Pauline Carry @paulinecarry.bsky.social · Dec 6

Send your labor papers and come present at Princeton!

Deadline is Dec 22.

irs.princeton.edu/news/2024/nl...

Call for Papers: 2025 Northeast Labor Symposium for Early Career Economists

2025 Northeast Labor symposium seeks to build community among junior faculty working on labor economic topics. Deadline to submit proposals is December 22, 2024.

irs.princeton.edu

Reposted by Jonathan Heathcote, Randi Hjalmarsson

Bhash Mazumder @bhashmazumder.bsky.social · Dec 3

Chicago Fed is hiring in our micro group! The ad is not yet on JOE but see this link. 3+ years of experience. Don't need rec letters but do need to list 3 references: rb.wd5.myworkdayjobs.com/en-US/FRS/jo...

Economist/Senior Economist/Economic Advisor - Microeconomics Team

Company Federal Reserve Bank of Chicago The Economic Research Department of the Federal Reserve Bank of Chicago invites applications for the Economist/Senior Economist/Economic Advisor positions on th...

rb.wd5.myworkdayjobs.com

Jonathan Heathcote @heathcote.bsky.social · Dec 3

I don’t quite understand the table. If I look at highly selective colleges, enrollment for every sub-group declined by more than enrollment for all. Perhaps there is a ‘did not declare race’ group, whose enrollment rose.

Reposted by Micaël Castanheira, Jonathan Heathcote, Pierre Boyer

Florian Scheuer @florianscheuer.bsky.social · Nov 29

Submit your papers to the next @cepr.org Public Economics Annual Symposium, taking place in Cologne on June 5-6, 2025. Co-organized with @sigginho.bsky.social and Johannes Spinnewijn, keynotes by Cecile Gaubert and @omzidar.bsky.social!

cepr.org/events/cepr-...

CEPR Public Economics Annual Symposium 2025

PDF document / 207.07 KB

cepr.org

Reposted by Mariacristina De Nardi

Jonathan Heathcote @heathcote.bsky.social · Nov 26

I will continue to update this -- let me know if you want in! (or out!)

Jonathan Heathcote @heathcote.bsky.social · Nov 21

Minnesota Economics Starter Pack! go.bsky.app/SJCFzaU

Reposted by Alan S. Goldman, Roger Mac Ginty, Kevin F. McCarthy , and 3 more Alan S. Goldman, Roger Mac Ginty, Kevin F. McCarthy, Jonathan Heathcote, Frank C. Thames, Jón Steinsson

WuTangIsForTheChildren @wutangforchildren.bsky.social · Nov 26

Remember when "Ferris Bueller's Day Off" tried to teach us about tariffs and no one was paying attention

Reposted by Jonathan Heathcote

Brian Albrecht @briancalbrecht.bsky.social · Nov 26

A little more context on my tariff argument, including why "success" is hard to measure www.economicforces.xyz/p/some-tarif...

Some tariffs are worse than others

My piece in the Financial Times and more thoughts on tariffs

www.economicforces.xyz

Reposted by Jonathan Heathcote

Garance Genicot @ggenicot.bsky.social · Nov 25

📢 Call for Papers open: Nov 1 – Feb 1, 2025 for the annual ThReD Conference, hosted by @MonashUni

📍 Monash Prato Centre, Prato, Italy🇮🇹
📅 June 25-26, 2025
Submit your research thred.devecon.org/conferences/...

#EconSky #DevelopmentEconomics

thred.devecon.org

Jonathan Heathcote @heathcote.bsky.social · Nov 24

I believe these subsidies are for operating costs. The one-time cost of building the line was a different pot of public money.

Jonathan Heathcote @heathcote.bsky.social · Nov 24

DOGE will find increasing government efficiency is easier said than done. But showing that you are at least trying not to waste taxpayer money is important. My county is raising property taxes sharply while subsidizing local rail to the tune of $116 per ride. www.startribune.com/what-is-nort...

What is Northstar rail’s fate? Likely more of the same, for now

This month marked the 15th year of the commuter rail service between Minneapolis and Big Lake. But ridership numbers haven’t rebounded to pre-pandemic levels, and a St. Cloud connection is uncertain.

www.startribune.com

Jonathan Heathcote @heathcote.bsky.social · Nov 21

Reforms are likely desirable, but these are super nice states to live in, so strong housing demand is supporting high prices in addition to limited supply. How many houses would we need to build in Hawaii to drive prices there down to Mississippi ($171k) or West Virginia ($155k) levels?

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