New Professor Francesco Bianchi

Monday, April 12, 2010
New Professor Francesco Bianchi

12 April 2010 12:00AM

Originally from the picturesque city of Prato near Florence, Italy, Francesco Bianchi joined the department of economics last summer as an assistant professor.

“I really liked that the department was committed to building a new macro group,” Bianchi said when asked why he took a position at Duke. “Things have turned out even better than I expected now that Nir Jaimovich [a macroeconomist currently at Stanford] is joining the faculty next year.”

Bianchi completed his economics and statistics undergraduate work in Milan. There at Bocconi University, Francesco discovered his interest in monetary economics.

“I read a paper which basically said that the high inflation of the 70’s was the result of misbehavior of the Federal Reserve, and in the same way, the Fed was responsible for the stability of the 80’s and 90’s,” explained Bianchi. “I found that intriguing."

"During my Ph.D. studies I started wondering what role agents’ beliefs about future Fed behavior play in this whole story. It turns out that what occurs today has a lot to do with what agents expect is going to happen tomorrow. For example, concerning the ‘70s, in a recent contribution I argue that if agents had anticipated the appointment of a very conservative Chairman, such as Paul Volcker, the Great Inflation would have been a much less extreme event.”

Bianchi's undergraduate advisor also encouraged him to read an interesting paper on asset pricing by two Harvard professors that compelled him to explore that area as well.

“My inkling is that perhaps the way individuals form expectations [for asset prices] relies heavily on extreme events like the Great Depression,” said Bianchi who examines the matter in another line of research. “Agents might observe 50 years of data that are not very informative and then learn a lot from observing a single market crush that reveals dynamics that during regular times are occurring behind the scenes.”

Bianchi’s early-developed interests persisted throughout his doctoral work at Princeton University and now include monetary economics, applied finance, and Bayesian econometrics. After obtaining his Ph.D. in June 2009, he joined the Duke faculty and continues to produce research for others to consider.

For example, Bianchi published “The Great Moderation of the Term Structure of U.K. Interest Rates” (with Haroon Mumtaz and Paolo Surico) in the Journal of Monetary Economics last year.

Though it takes longer to get to his native Italy, Bianchi has found living in the South appealing thus far. “The Duke campus is so similar to Princeton campus - it’s like being at Princeton, but with much better weather,” said Bianchi. “I love it.”

The openness of the senior professors in the department has aided in Bianchi’s transition. “They are very busy but always willing to spend some time chatting even on minor issues – this really helps especially when you are beginning your career.”

Learn more about Professor Bianchi at his profile page.