Sylvia Xiao

Dr. Xiaolin(Sylvia) XIAO is an Assistant Professor at the Department of Applied Economics, Guanghua School of Management, Peking University. Her main research areas are monetary economics and macroeconomics. Before joining Guanghua in August 2018, she used to work at University of Wisconsin-Madison, U.S.A., (2015-2017) and Auckland University of Technology, New Zealand (2017-2018), and earned her PhD in economics from University of Technology, Sydney, Australia (2011-2014). She has published at Journal of Monetary Economics, International Economic Review, Journal of Economic Dynamics and Control, and China Economic Review. She is currently working on: 1. Central Bank Digital Currency; 2. Cryptocurrency and Capital Control; 3. Firm Investment and Capital Reallocation.

Research Areas

• Macroeconomics
• Monetary Economics
• Search and Matching Theory

PUBLICATIONS:

• Liquidity, Monetary Policy and Unemployment (with Mei Dong), International Economic Review (2019), 60, 1005-1025
• Open Market Operations (with Guillaume Rocheteau and Randall Wright), Journal of Monetary Economics(2018), 98, 114-128
• Frictional Capital Reallocation I: Ex Ante Heterogeneity (With Randall Wright and Yu Zhu), Journal of Economic Dynamics and Control (2018), 89, 100-116.
• Rural-led Exchange Rate Appreciation in China (with G. Menzies, P. Dixon, X. Peng and M. Rimmer), China Economic Review (2016), 39, 15–30

WORKING PAPERS

• Frictional Capital Reallocation II: Ex Post Heterogeneity (with Randall Wright and Yu Zhu), R&R Abstract: We investigate models where firms trade capital in frictional secondary markets. Our previous work assumed ex ante heterogeneity: similar firms have different capital stocks. Here we study ex post heterogeneity: firms with similar capital realize different productivity shocks, which is more natural, and requires fewer arbitrary restrictions. It is also extremely tractable. For random or directed search, and bargaining or posting, results are provided on existence, uniqueness, efficiency and monetary/fiscal policy -- e.g., higher nominal rates can lower or raise investment, and can be desirable, despite hindering reallocation. The model captures salient stylized facts -- e.g., misallocation appears countercyclical while capital's reallocation and price are procyclical. We discuss how productivity dispersion is an imperfect measure of inefficiency or frictions. We also discuss connections to models of frictional markets for financial assets.
• Firms' Portfolio Choices, Capital Reallocation and Monetary Policy (Solo Author), a draft available upon request [Presentations: May, 2019, Baptist University of Hong Kong; April, 2019, University of Hong Kong; June 2018, Department of Economics, University of Melbourne; June 2018, Economics Discipline Group, University of Technology Sydney; May 2018, Department of Economics, University of Auckland, NZ; April 2018, Department of Economics, University of California – Davis, U.S.; April 2018, Finance Department, University of Wisconsin – Madison, U.S.; June 2017, Department of Economics, University of Wisconsin-Madison] Abstract: This paper builds a micro-founded model featuring frictional asset market and frictional capital market, to address the interaction between firms' portfolio choices and capital reallocation/accumulation, and the effects of monetary policy. Analytical results show there are different types of general equilibrium, depending on the cash and asset constraints. Two types of monetary policy are discussed: one is conventional policy, i.e., changing inflation rate; the other is unconventional policy, i.e., asset purchase/sale by the central bank. The latter is only valid when the asset constraint is binding.
• Central Bank Digital Currency: A Corporate Finance Perspective (with Mei Dong), a draft available upon request [Conference Presentations: 2019 China Fintech Research Conference, forthcoming; 5th Workshop of Australian Macroeconomics Society(WAMS), forthcoming; MidWest Macro Fall Meetings, Nov. 2019; International Finance&Trade Workshop, Nanjing Audit Uni., Oct. 2019; 4th Annual Academic Conference 2019, Institute of Digital Finance, Peking Uni., August 2019; China&World Economy Annual Conference, July 2019; Asian Meeting of the Econometric Society, June 2019 Seminars: Economics, University of California - Irvine. Nov. 2019; RSE, Australian National University, Oct. 2019; PBC School of Finance, Tsinghua Uni., Sept. 2019] Abstract: We build models with interest-bearing central bank digital currency (CBDC) to investigate the impacts of issuing CBDC on banking and the macroeconomy. From a corporate finance perspective, we find various designs of CBDC lead to different impacts. The design issues considered include: (1) a universal CBDC system or CBDC and cash coexisting; (2) CBDC being complements or substitutes of bank deposits; (3) banks having access to CBDC or not. As for policy, we find the interest rate of CBDC can be an effective policy tool, which has clear pass-though to the real deposit and loan rates, and then transmission to firm investment (ususally positive impacts) and the real economy. In addition, negative interest rate can be an option for policy makers, particularly in the economy with a universal CBDC.

WORK IN PROGRESS

• Central Bank Digital Currency: A Consumer Finance Perspective
• Central Bank Digital Currency in a Channel System
• Digital Currency and Privacy
• Cryptocurrency and Capital Control