Our Team

Andreas Hornstein

Andreas Hornstein is a senior advisor in the Research Department. His work has been published in a number of economic journals, including the American Economic Review, the Review of Economic Studies, and the NBER Macroeconomic Annual. Prior to joining the Federal Reserve Bank of Richmond in 1996, Hornstein taught at the University of Western Ontario in London, Canada. He earned his doctorate from the University of Minnesota in 1991.

Hornstein's research is centered on topics in macroeconomics, mainly business cycles and growth. Recently, he has researched the efficiency of labor markets, the extent of wage inequality, and the role of capital accumulation in transition economies.

Academic Publications
Aggregate Implications of Changing Sectoral Trends

Journal of Political Economy, Vol. 130, December 2022: 3286-3333

Andrew Foerster, Andreas Hornstein, Pierre-Daniel G. Sarte and Mark W. Watson

Previous Version: Working Paper, May 2019, No. 19-11R

Technical Appendix and Supplementary Materials
On the Employment Effects of Productivity Shocks: The Role of Inventories, Demand Elasticity, and Sticky Prices

Journal of Monetary Economics, Vol. 56, April 2009: 328-343

Yongsung Chang, Andreas Hornstein and Pierre-Daniel G. Sarte

Technology-Policy Interaction in Frictional Labour-Markets

Review of Economic Studies, Vol. 74, October 2007: 1089-1124

Andreas Hornstein, Per Krusell and Giovanni L. Violante

Previous Version: Working Paper, November 2006, No. 06-10

The Replacement Problem in Frictional Economies: A Near-Equivalence Result

Journal of the European Economic Association, Vol. 3, September 2005: 1007-1057

Andreas Hornstein, Per Krusell and Giovanni L. Violante

Previous Version: Working Paper, April 2005, No. 05-1

Book Review: The Macroeconomics of Imperfect Competition and Nonclearing Markets: A Dynamic General Equilibrium Approach

Journal of Economic Literature, Vol. 42, June 2004: 513-515

Andreas Hornstein

Should a Monetary Policymaker Look at Money?

Journal of Monetary Economics, Vol. 50, April 2003: 547-579

Michael Dotsey and Andreas Hornstein

Book Review: Barriers to Riches

Journal of Economic Literature, Vol. 40, December 2002: 1246-1248

Andreas Hornstein

The Role of Real Wages, Productivity, and Fiscal Policy in Germany’s Great Depression 1928-1937

Review of Economic Dynamics, Vol. 5, January 2002: 100-127

Jonas D.M. Fisher and Andreas Hornstein

Previous Version: Working Paper, August 2001, No. 01-7

What Is the Real Story for Interest Rate Volatility?

German Economic Review, Vol. 1, February 2000: 43-67

Andreas Hornstein and Harald Uhlig

Previous Version: Working Paper, October 1999, No. 99-9

(S, s) Inventory Policies in General Equilibrium

Review of Economic Studies, Vol 67, January 2000: 117-145

Jonas D.M. Fisher and Andreas Hornstein

Previous Version: Working Paper, May 1997, No. 97-7 (Published Nov. 1994, Revised Feb. 1998)

Can a Matching Model Explain the Long-Run Increase in Canada's Unemployment Rate?

Canadian Journal of Economics, Vol. 32, August 1999: 878-905

Andreas Hornstein and Mingwei Yuan

Previous Version: Working Paper, March 1998, No. 98-2

Intermediate Inputs and Sectoral Comovement in the Business Cycle

Journal of Monetary Economics, Vol. 40, December 1997: 573-595

Andreas Hornstein and Jack Praschnik

Previous Version: Working Paper, May 1997, No. 97-6

Monopolistic Competition, Increasing Returns to Scale, and the Importance of Productivity Shocks

Journal of Monetary Economics, Vol. 31, June 1993: 299-316

Andreas Hornstein

Money and Insurance in a Turnpike Environment

Economic Theory, Vol. 3, March 1993: 19-34

Andreas Hornstein and Per Krusell

Insurance Contracts as Commodities: A Note

Review of Economic Studies, Vol. 58, October 1991: 917-928

Andreas Hornstein and Edward C. Prescott
Bank Publications

Economic Brief, November 2024, No. 24-34

The Persistent Decline of LFP Rates for Older Individuals Around the Pandemic

Some inferred early retirement or unexpected wealth gains played a role, but the data suggest that these drops were either not very persistent or reflected as part of long-run trends.

Andreas Hornstein

Economic Brief, June 2024, No. 24-19

Aggregate Effects of the Adoption of AI

What are early studies suggesting about how AI may impact labor productivity?

Andreas Hornstein

Economic Brief, May 2024, No. 24-13

Residual Seasonality in Monthly Core Inflation

Early 2024 inflation numbers appear high, but should such an early-year jump be expected most years?

Andreas Hornstein

Economic Brief, November 2023, No. 23-38

Profits and Inflation in the Time of COVID

An alternative measure of profits — the price-cost markup — suggests that its contribution to inflation in the nonfinancial corporate business sector was rather small.

Andreas Hornstein

Economic Brief, April 2023, No. 23-13

Unemployment Changes as Recession Indicators

Changes in unemployment appear to be strong recession predictors, especially when combined with lagged term spreads.

Andreas Hornstein

Economic Brief, November 2022, No. 22-44

How Did Pandemic UI Benefits Affect Employment Recovery in Local Industry Markets?

Pandemic-era unemployment insurance affected recoveries of low-wage job markets and high-wage job markets differently.

Andreas Hornstein, Marios Karabarbounis, André Kurmann and Etienne Lalé

Economic Brief, August 2022, No. 22-30

Recession Predictors: An Evaluation

The yield curve is often used to gauge potential recessions. Can its predictive value be improved?

Andreas Hornstein

Honoring Marvin Goodfriend, May 2022

Interest Rate Smoothing

The concept of interest rate smoothing behavior by central banks is now standard, but it was not in the early 1980s when Marvin Goodfriend made the concept into a distinct phenomenon to be explained.

Michael Dotsey, Andreas Hornstein and Alexander L. Wolman

Economic Brief, April 2022, No. 22-12

The Pandemic's Impact on Unemployment and Labor Force Participation Trends

The unemployment rate is close to pre-pandemic lows, and job openings are at record highs. Yet, participation and employment rates are still below pre-pandemic levels.

Andreas Hornstein and Marianna Kudlyak

Economic Brief, June 2021, No. 21-18

Was There a Better Way to Contain COVID-19?

Targeted interventions toward COVID-19, rather than universal stay-at-home orders, might have resulted in less economic damage and fewer deaths, according to one researcher.

Andreas Hornstein

Economic Quarterly, First Quarter 2020

Labor-Market Wedge under Engel Curve Utility: Cyclical Substitution between Necessities and Luxuries

Yongsung Chang, Andreas Hornstein and Marios Karabarbounis

Economic Brief, September 2019, No. 19-09

Projecting Unemployment and Demographic Trends

Andreas Hornstein, Marianna Kudlyak and John Mullin

Economic Brief, October 2016, No. 16-10

Assessing the Effect of the Affordable Care Act on Part-Time Employment

Andreas Hornstein and David A. Price

Economic Quarterly, Second Quarter 2016

Generalized Matching Functions and Resource Utilization Indices for the Labor Market

Andreas Hornstein and Marianna Kudlyak

Economic Brief, September 2015, No. 15-09

Inflation Targeting: Could Bad Luck Explain Persistent One-Sided Misses?

Andreas Hornstein, Joe Johnson and Karl Rhodes

Economic Quarterly, Second Quarter 2015

The Rise in Long-Term Unemployment: Potential Causes and Implications

Andreas Hornstein and Thomas A. Lubik

Economic Brief, June 2014, No. 14-06

Does the Unemployment Rate Really Overstate Labor Market Recovery?

Andreas Hornstein, Marianna Kudlyak, Fabian Lange and Tim Sablik

Economic Quarterly, First Quarter 2014

Measuring Resource Utilization in the Labor Market

Andreas Hornstein, Marianna Kudlyak and Fabian Lange

Economic Quarterly, First Quarter 2013

Why Labor Force Participation (Usually) Increases when Unemployment Declines

Andreas Hornstein

Economic Brief, August 2013, No. 13-08

Will a Surge in Labor Force Participation Impede Unemployment Rate Improvement?

Andreas Hornstein and Karl Rhodes

Economic Quarterly, Third Quarter 2011

Introduction to the Special Issue on Modern Macroeconomic Theory

Andreas Hornstein

Economic Brief, September 2011, No. 11-09

Potential Causes and Implications of the Rise in Long-Term Unemployment

Andreas Hornstein, Thomas A. Lubik and Jessie Romero

Economic Quarterly, Second Quarter 2010

Monetary Policy with Interest on Reserves

Andreas Hornstein

Annual Report, 2010

The Rise in Long-Term Unemployment: Potential Causes and Implications

Andreas Hornstein and Thomas A. Lubik

Economic Quarterly, Winter 2009

Problems for a Fundamental Theory of House Prices

Andreas Hornstein

Economic Quarterly, Fall 2008

Introduction to the New Keynesian Phillips Curve

Andreas Hornstein

Economic Quarterly, Fall 2007

Evolving Inflation Dynamics and the New Keynesian Phillips Curve

Andreas Hornstein

Economic Quarterly, Spring 2006

Implementation of Optimal Monetary Policy

Michael Dotsey and Andreas Hornstein

Economic Quarterly, Fall 2005

Trend Inflation, Firm-Specific Capital, and Sticky Prices

Andreas Hornstein and Alexander L. Wolman

Economic Quarterly, Summer 2005

Unemployment and Vacancy Fluctuations in the Matching Model: Inspecting the Mechanism

Andreas Hornstein, Per Krusell and Giovanni L. Violante

Economic Quarterly, Fall 2004

(Un)Balanced Growth

Andreas Hornstein

Economic Quarterly, Fall 2003

Implications of the Capital-Embodiment Revolution for Directed R&D and Wage Inequality

Andreas Hornstein and Per Krusell

Economic Quarterly, Spring 2002

Towards a Theory of Capacity Utilization: Shiftwork and the Workweek of Capital

Andreas Hornstein

Economic Quarterly, Fall 2000

The IT Revolution: Is It Evident in the Productivity Numbers?

Per Krusell and Andreas Hornstein

Economic Quarterly, Winter 2000

The Business Cycle and Industry Comovement

Andreas Hornstein

Economic Quarterly, Summer 1999

Growth Accounting with Technological Revolutions

Andreas Hornstein

Economic Quarterly, Spring 1998

Inventory Investment and the Business Cycle

Andreas Hornstein
Working Papers

November 2023, No. 23-11

Disincentive Effects of Unemployment Insurance Benefits

This paper provides independent estimates of the disincentive effects arising from the largest expansion of UI in U.S. history, the pandemic unemployment benefits.

Andreas Hornstein, Marios Karabarbounis, André Kurmann, Etienne Lalé and Lien Ta

April 2021, No. 21-08

Quarantine, Contact Tracing, and Testing: Implications of an Augmented SEIR Model

Andreas Hornstein

May 2020, No. 20-04

Social Distancing, Quarantine, Contact Tracing, and Testing: Implications of an Augmented SEIR Model*

Andreas Hornstein

May 2019, No. 19-11R

Aggregate Implications of Changing Sectoral Trends (Revised August 2019)

Andrew Foerster, Andreas Hornstein, Pierre-Daniel G. Sarte and Mark W. Watson

March 2019, No. 19-08

Aggregate Labor Force Participation and Unemployment and Demographic Trends

Andreas Hornstein and Marianna Kudlyak

July 2018, No. 18-13

Labor-Market Wedge under Engel Curve Utility: Cyclical Substitution between Necessities and Luxuries

Yongsung Chang, Andreas Hornstein and Marios Karabarbounis

October 2016, No. 16-13R

Estimating Matching Efficiency with Variable Search Effort (Revised December 2016)

Andreas Hornstein and Marianna Kudlyak

November 2012, No. 12-07

Accounting for Unemployment: The Long and Short of It

In view of the increasing share of long-term unemployment since the 2007-09 recession, we provide an extension of the Shimer (2012) unemployment accounting scheme that allows for both short-term and long-term unemployment and that uses data on the duration distribution of unemployment.

Andreas Hornstein

August 2011, No. 11-04R

Transition Dynamics in the Neoclassical Growth Model: The Case of South Korea (Revised August 2013)

Yongsung Chang and Andreas Hornstein

April 2009, No. 09-6R

On the Implementation of Markov-Perfect Monetary Policy (Revised August 2011)

Michael Dotsey and Andreas Hornstein

April 2009, No. 09-3

Notes on Collateral Constraints in a Simple Model of Housing

Andreas Hornstein

August 2007, No. 07-4

Notes on the Inflation Dynamics of the New Keynesian Phillips Curve

Andreas Hornstein

November 2006, No. 06-10

Technology-Policy Interaction in Frictional Labor Markets

Andreas Hornstein, Per Krusell and Giovanni L. Violante

September 2006, No. 06-8

Technical Appendix for "Frictional Wage Dispersion in Search Models: A Quantitative Assessment"

Andreas Hornstein, Per Krusell and Giovanni L. Violante

September 2006, No. 06-7

Frictional Wage Dispersion in Search Models: A Quantitative Assessment

Andreas Hornstein, Per Krusell and Giovanni L. Violante

August 2006, No. 06-6

Understanding How Employment Responds to Productivity Shocks in a Model with Inventories

Yongsung Chang, Andreas Hornstein and Pierre-Daniel G. Sarte

May 2006, No. 06-4

Home Production

Yongsung Chang and Andreas Hornstein

April 2005, No. 05-1

The Replacement Problem in Frictional Economies: A Near-Equivalence Result

Andreas Hornstein, Per Krusell and Giovanni L. Violante

December 2004, No. 04-8

The Effects of Technical Change on Labor Market Inequalities

Andreas Hornstein, Per Krusell and Giovanni L. Violante

December 2004, No. 04-9

Productivity, Employment, and Inventories

Pierre-Daniel G. Sarte, Andreas Hornstein and Yongsung Chang

November 2002, No. 02-4

Should Optimal Discretionary Monetary Policy Look at Money?

Michael Dotsey and Andreas Hornstein

August 2002, No. 02-2

Vintage Capital as an Origin of Inequalities

Giovanni L. Violante, Per Krusell and Andreas Hornstein

August 2001, No. 01-7

The Role of Real Wages, Productivity, and Fiscal Policy in Germany's Great Depression 1928-37

We study the behavior of output, employment, consumption, and investment in Germany during the Great Depression of 1928-37. In this time period, real wages were countercyclical, and productivity and fiscal policy was procyclical.

Jonas D.M. Fisher and Andreas Hornstein

March 2001, No. 01-6

Sticky Prices and Inventories: Production Smoothing Reconsidered

Pierre-Daniel G. Sarte and Andreas Hornstein

October 1999, No. 99-9

What is the Real Story for Interest Rate Volatility?

Andreas Hornstein and Harald Uhlig

December 1998, No. 98-8

Staggered Prices and Inventories: Production Smoothing Reconsidered

Pierre-Daniel G. Sarte and Andreas Hornstein

March 1998, No. 98-2

Can a Matching Model Explain the Long-Run Increase in Canada's Unemployment Rate? (Published: Apr. 1996; Revised: Jan. 1998)

Andreas Hornstein and Mingwei Yuan

March 1998, No. 98-1

External vs. Internal Learning-by-Doing in an R&D Based Growth Model

Andreas Hornstein and Dan Peled

May 1997, No. 97-7 (Published Nov. 1994, Revised Feb. 1998)

(S,s) Inventory Policies in General Equilibrium

Jonas D.M. Fisher and Andreas Hornstein

May 1997, No. 97-6

Intermediate Inputs and Sectoral Comovement in the Business Cycle

Andreas Hornstein and Jack Praschnik
Work in Progress

"Social Distancing, Quarantine, Contact Tracing, and Testing: Implications of an Augmented SEIR-Model," May 2020. Download MATLAB Code.

"A New Measure of Resource Utilization in the Labor Market" (joint with Marianna Kudlyak and Fabian Lange), April 2014.

"The Cyclicality of the Labor Force Participation Rate," May 2013.

Andreas Hornstein (804) 697-8266