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M. Saif Mehkari
Associate Professor of Economics

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I am an Associate Professor in the Economics Department at the Robins School of Business, University of Richmond.

My areas of research are business cycles and fiscal policy. I am currently working on research that looks at how changes in repatriation tax policy effect firm behavior, and research that looks at the effects of the American Recovery and Reinvestment Act of 2009 on the U.S. Economy.


Published Papers

Regional Consumption Responses and the Aggregate Fiscal Multiplier, with Bill Dupor, Marios Karabarbounis and Marianna Kudlyak, Review of Economic Studies (Accepted).

Abstract: We use regional variation in the American Recovery and Reinvestment Act (2009-2012) to analyze the effect of government spending on consumer spending. Our consumption data come from household-level retail purchases in the Nielsen scanner data and auto purchases from Equifax credit balances. We estimate that a $1 increase in county-level government spending increases local non-durable consumer spending by $0.29 and local auto spending by $0.09. We translate the regional consumption responses to an aggregate fiscal multiplier using a multi-region, New Keynesian model with heterogeneous agents, incomplete markets, and trade linkages. Our model is consistent with the estimated positive local multiplier, a result that distinguishes our incomplete markets model from models with complete markets. At the zero lower bound, the aggregate consumption multiplier is twice as large as the local multiplier because trade linkages propagate the effect of government spending across regions.

Repatriation Taxes, with Chadwick C. Curtis and Julio Garin, Review of Economic Dynamics, April 2020, pp. 293-313.

Abstract: We present a model of a multinational firm to quantify the effects of policy changes in repatriation tax rates. The framework captures the dynamic responses of the firm from the time a policy change is anticipated through its enactment, including its long-run effects. We find that failing to account for anticipatory behavior surrounding a reduction in repatriation tax rates overstates the amount of profits repatriated from abroad and underestimates tax revenue losses. We further show that policy changes have a relatively small impact on hiring and investment decisions if firms have relatively easy access to credit markets -- as is the case for most multinational firms. Finally, by altering the relative price of holding assets abroad, news of a future reduction in repatriation tax rates acts as an implicit tax on repatriating funds today. We capture and quantify this "shadow tax."

Schools and Stimulus, with Bill Dupor, Federal Reserve Bank of St. Louis Review , Second Quarter 2020, Vol. 102-2.

Abstract: This article analyzes the impact of the education funding component of the American Recovery and Reinvestment Act of 2009 (Recovery Act) on public school districts. We use cross-sectional differences in district-level Recovery Act funding to investigate the program’s impact on staffing, expenditures, and debt accumulation. To achieve identification, we use exogenous variation across districts in the allocations of Recovery Act funds for students with special needs. We estimate that 1 million dollars in grants to a district had the following average effects: Expenditures increased by 570,000 dollars, employment changed little to none, and debt increased by 370,000 dollars. Moreover, 70 percent of the increase in expenditures was in the form of capital outlays. Next, we build a dynamic, decision-theoretic model of a school district’s budgeting problem, which we calibrate to district-level expenditures and staffing data. The model can qualitatively match the employment and capital expenditure responses from our regressions. We also use the model to conduct policy experiments.

Inflation and the Evolution of Firm-Level Liquid Assets, with Chadwick C. Curtis and Julio Garin, Journal of Banking and Finance, August 2017, pp.24-35.

Abstract: This paper shows that inflation has been an important determinant of firm-level liquid asset holdings. Liquid assets as a share of total assets – the cash ratio – for U.S. corporations steadily declined from the 1960s to the early 1980s, and has since steadily increased. Our empirical analysis finds that inflation is a key factor accounting for these changes. We show that these liquid asset holdings are imperfectly hedged against inflation. Hence, changes in inflation alter the real value of a firm’s liquid asset portfolio causing them to readjust these balances.

Uncertainty Shocks in a Model with Mean-Variance Frontiers and Endogenous Technology Choices, Journal of Macroeconomics, September 2016, pp.71-98.

Abstract: This paper builds a model to show how increases in aggregate uncertainty – an uncertainty shock – can generate recessions. Uncertainty shocks in the model are able to both account for a significant portion of business cycle fluctuations observed in data and generate positive comovements between output, consumption, investment, and hours. The key assumption of the model is that firm managers endogenously choose what projects to undertake and that the menu of these projects lies on a positively sloped mean-variance frontier – high-return projects are also high-risk projects. In times of high aggregate uncertainty, managers choose to undertake low-risk projects, and thus low-return projects, which in turn leads to a recession. Moreover, the model also matches various stylized facts about time series and cross-sectional variations in TFP and suggests shortcomings in using TFP data to calculate exogenous TFP shocks.

The 2009 Recovery Act: Stimulus at the Extensive and Intensive Labor Margins, with Bill Dupor, European Economic Review, June 2016, pp.208-228.

Abstract: This paper studies the effect of government stimulus spending on a novel aspect of the labor market: the differential impact of spending on the total wage bill versus employment. We analyze the 2009 Recovery Act via instrumental variables using a new instrument, the spending done by federal agencies that were not instructed to target funds towards harder hit regions. We find a moderate positive effect on jobs created/saved (i.e., the “extensive margin”) and also a significant increase in wage payments to workers whose job status was safe without Recovery Act funds (i.e., the “intensive margin”). Our point estimates imply that roughly one-half of the wage payments resulting from the act were paid at the intensive margin. To provide a theoretical underpinning for the estimates, we build a micro-founded dynamic model in which a firm meets new government demand with a combination of new hiring and increasing existing workers׳ average hours. Faced with hiring costs and an overtime premium, the firm responds by increasing hours along both margins. Our model analysis also provides insight into how government spending policy should be structured to lower the cost of generating new jobs. Finally, we catalogue survey evidence from Recovery Act fund recipients that reinforces the importance of the intensive labor margin.

The Analytics of Technology News Shocks, with Bill Dupor, Journal of Economic Theory, September 2014, pp.392-427.

Abstract: This paper constructs several models in which, unlike the standard neoclassical growth model, positive news about future technology generates an increase in current consumption, hours and investment. These models are said to exhibit procyclical news shocks. We find that all models that exhibit procyclical news shocks in our paper have two commonalities. There are mechanisms to ensure that: (I) consumption does not crowd out investment, or vice versa; (II) the benefit of forgoing leisure in response to news shocks outweighs the cost. Among the models we consider, we believe, one model holds the greatest potential for explaining procyclical news shocks. Its critical assumption is that news of the future technology also illuminates the nature of this technology. This illumination in turn permits economic actors to invest in capital that is forward-compatible, i.e. adapted to the new technology. On the technical side, our paper reintroduces the Laplace transform as a tool for studying dynamic economies analytically. Using Laplace transforms we are able to study and prove results about the full dynamics of the model in response to news shocks.

Working Papers

The 2008 U.S. Auto Market Collapse, with Bill Dupor, Rong Li and Yi-Chan Tsai.

Abstract: New vehicle sales in the U.S. fell nearly 40 percent during the past recession, causing significant job losses and unprecedented government interventions in the auto industry. This paper explores three potential explanations for this decline: increasing oil prices, falling home values, and falling household income expectations. First, we use the historical macroeconomic relationship between oil prices and vehicle sales to show that the oil price spike explains roughly 15 percent of the auto sales decline between 2007 and 2009. Second, we establish that declining home values explain only a small portion of the observed reduction in household new vehicle sales. Using a county-level panel from the episode, we find (1) a one-dollar fall in home values reduced household new vehicle spending by 0.5 to 0.7 cents and overall new vehicle spending by 0.9 to 1.2 cents and (2) falling home values explain between 16 and 19 percent of the overall new vehicle spending decline. Next, examining state-level data for 1997-2016, we find (3) the short-run responses of new vehicle consumption to home value changes are larger in the 2005-2011 period relative to other years, but at longer horizons (e.g. 5 years), the responses are similar across the two sub-periods and (4) the service flow from vehicles, as measured by miles traveled, responds very little to house price shocks. We also detail the sources of the differences between our findings (1) and (2) from existing research. Third, we establish that declining current and expected future income expectations potentially played an important role in the auto market's collapse. We build a permanent income model augmented to include infrequent repeated car buying. Our calibrated model matches the pre-recession distribution of auto vintages and the liquid-wealth-to-income ratio, and exhibits a large vehicle sales decline in response to a mild decline in expected permanent income due to a transitory slowdown in income growth. In response to the shock, households delay replacing existing vehicles, allowing them to smooth the effects of the income shock without significantly adjusting the service flow from their vehicles. Augmenting our model with a richer set of household expectations allows us to match 65 percent of the overall new vehicle spending decline (i.e. roughly the portion of the decline not explained by oil prices and falling home values). Combining our negative results regarding housing wealth and oil prices with our positive model-based findings, we interpret the auto market collapse as consistent with existing permanent income based approaches to durable goods purchases (e.g., Leahy and Zeira (2005))

Work in Progress

Small Fixed Costs and Countercyclical Aggregate Volatility
Is Offshoring to Blame for Jobless Recoveries? , with Manisha Goel.


University of Richmond

Full List of Courses
ECON 101: Principles of Microeconomics
ECON 102: Principles of Macroeconomics
ECON 242: Data Analysis & Computing for Economics & Business
ECON 249: Topics in Applied Quantiative Economics (Basics of Pandas, SQL, Data Viz, ML)
ECON 272: Macroeconomic Theory
ECON 341: Mathematical Economics
ECON 372: Advanced Macroeconomics

The Ohio State University

Independent (Full Responsibility)
ECON 200: Principles of Microeconomics
ECON 201: Principles of Macroeconomics
ECON 502.01: Intermediate Macroeconomic Theory
ECON 502.02: Intermediate Macroeconomic Theory (Calculus Based Version)
ECON 520: Money and Banking

Teaching Assistant
ECON 200: Principles of Microeconomics
ECON 700: Advanced Mathematical Techniques in Economics (Graduate Course)
ECON 704: Survey of Microeconomics (Graduate Course)
ECON 807: Macroeconomic Theory II (Graduate Course)
Math Camp: Mathematics for Economics Workshop (Graduate Course)

Other Teaching
ECON 110.02: Basic Economic Concepts: Freakonomics (Grader)
ECON 201: Principles of Macroeconomics (Assistant to Main Instructor)
ECON 556: Cooperation and Conflict in the Global Economy (Grader/Assistant to Main Instructor)

Curriculum Vitae

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Contact Information

Postal Address
Department of Economics
Robins School of Business
University of Richmond
1 Gateway Road
VA, 23173

Office Information
Office: Robins School of Business (BUS) 246
Office Hours: Tuesdays 2:00-4:00pm or by appointment


+1 804 289 8574