I'm an economist at the Federal Reserve Bank of San Francisco. I received my Ph.D. in Economics from Columbia University in May 2023. 

My research interests are in macroeconomics, monetary economics, and behavioral economics. In recent works, I have studied expectations formations and their macroeconomic and financial implications.


Here is my CV.

You can contact me at yeji.sung@sf.frb.org.

Working Papers

Conventional models of information frictions assume it is costly to process external information. However, these models cannot explain puzzling patterns observed in survey forecasts. I propose a model in which internal information — knowledge stored in memory — is also costly to process. The model is consistent with survey-forecast patterns and offers an estimation strategy to identify the extent of information frictions. I then explore the macroeconomic implications of these frictions. The proposed model suggests that inflation expectations are not well anchored, making it more challenging to stabilize inflation than under conventional information-friction models.

Optimally Imprecise Memory and Biased Forecasts, November 2022 

with Rava Azeredo da Silveira and Michael Woodford

Revise and Resubmit, American Economic Review

We propose a model of optimal decision making subject to a memory constraint. The constraint is a limit on the complexity of memory measured using Shannon's mutual information, as in models of rational inattention; but our theory differs from that of Sims (2003) in not assuming costless memory of past cognitive states. We show that the model implies that both forecasts and actions will exhibit idiosyncratic random variation; that average beliefs will also differ from rational- expectations beliefs, with a bias that fluctuates forever with a variance that does not fall to zero even in the long run; and that more recent news will be given disproportionate weight in forecasts. We solve the model under a variety of assumptions about the degree of persistence of the variable to be forecasted and the horizon over which it must be forecasted, and examine how the nature of forecast biases depends on these parameters. The model provides a simple explanation for the over-reaction to news observed in the laboratory by Afrouzi et al. (2020).

Work in Progress

Inflation Surprises and Perceived Inflation Risk (with Miguel Acosta)

We document that people become more uncertain about future inflation when current inflation exceeds their expectations. This behavior is a feature of both household and professional forecasts, even when inflation is low and stable. Typical models of expectation formation leave little room for this link between inflation surprises and perceived inflation risk, especially when inflation has long been stable. We propose limited memory as an explanation for this link. When people learn about the inflation process from their experience, they perceive inflation to be higher and more variable when faced with higher-than-expected inflation. This intuition has implications for the price determination of financial contracts that compensate for the variation of the underlying assets.

Optimal Index versus Simple Index for Monetary Policy (with Jae Won Lee)

Which inflation index should the central bank target in a currency union? A currency union comprises different sectors or regions that are heterogeneous in many dimensions. According to recent literature, the central bank can improve the union's welfare by targeting an optimally constructed inflation index that carefully considers the heterogeneity in the nominal price rigidity. Despite such active theoretical research, policy discussions are often centered around simple and standard indices. We explain this disconnect between theory and practice using a stylized currency union model, where a single central bank implements monetary policy on behalf of multiple member countries with different nominal price rigidities. Using this model, we suggest two possible explanations for the disconnect. First, the welfare gain from adopting an optimal index over a simple index can be small depending on the level of real and financial integration within the union. Second, adopting an optimal inflation index may be politically infeasible as some member countries would be better off exiting the union.

Teaching

At Columbia University, I was a teaching assistant for


At Seoul National University, I was a teaching assistant for


Policy Pieces

The impact of TLTOR2 on the Italian credit market: some econometric evidence, Feb. 2020

with Lucia Esposito and Davide Fantino 

Bank of Italy Temi di discussione No. 1264

This work evaluates the impact of the second series of Targeted Longer-Term Refinancing Operations (TLTRO2) on credit market conditions for Italian firms. The estimates use a difference-in-differences approach on quarterly data, including term loans, interest rates, and bank and firm characteristics, between the start of 2015 and the end of 2017. The TLTRO2 had a positive impact on credit, encouraging lending to firms and reducing interest rates. The impact on the amount of credit was stronger for less risky firms, while that on interest rates was stronger for riskier ones. Smaller firms benefited more in terms of both loan amounts and interest rates.