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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

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

Repatriation Taxes, with Chadwick C. Curtis and Julio Garin.

Abstract: How do firms respond to news about future repatriation tax changes? We present a model of a multinational firm to quantify the effects of changes in repatriation taxes - taxes that firms pay on profits remitted from abroad. We find that expectations of lower future repatriation tax rates induce firms to accumulate assets overseas. A subsequent lowering of the repatriation tax rate causes a large transfer of assets from abroad, but a significant portion of these assets are those that were accumulated in anticipation of the policy change. Further, a failure to account for news effects overestimates the gains in domestic activity from lowering repatriation taxes and understates the tax losses. Including uncertainty amplifies these effects while allowing firms to borrow further mitigates the effects on domestic activity. 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 wedge, which we refer to as a "shadow tax."

Regional Consumption Responses and the Aggregate Fiscal Multiplier, with Bill Dupor, Marios Karabarbounis and Marianna Kudlyak.

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 Nielsen and auto purchases from Equifax credit balances. We estimate that a $1 increase in county-level government spending increases consumer spending by $0.29. We translate the regional consumption responses to an aggregate fiscal multiplier using a multi-region, New Keynesian model with heterogeneous agents and incomplete markets. Our model successfully generates the estimated positive local multiplier, a result that distinguishes our incomplete markets model from models with complete markets. The aggregate consumption multiplier is 0.64, which implies an output multiplier higher than one. The aggregate consumption multiplier is larger than the local estimate because trade linkages propagate government spending across regions.

Schools and Stimulus, with Bill Dupor.

Abstract: This paper analyzes the impact of the education funding component of the 2009 American Recovery and Reinvestment Act (the Recovery Act) on public school districts. We use crosssectional 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 special needs students. We estimate that $1 million of grants to a district had the following effects: expenditures increased by $570 thousand, district employment saw little or no change, and an additional $370 thousand in debt was accumulated. Moreover, 70% of the increase in expenditures came 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 expenditure 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.

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 102: Principles of Macroeconomics
ECON 260: Introduction to Computing Techniques for Solving Business & Economic Problems
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