I am an economist at the Federal Reserve Bank of New York and a tenured Associate
Professor of Economics and Policy at the University of Cambridge, Judge Business School.
I am also a Research Affiliate at the Center for Economic Policy Research (CEPR).
About me:
Born and raised in Sardinia (Italy), I received my PhD in Economics from the
University of Chicago and a Bachelor degree and Master of Science from Bocconi University.
Editorial appointments:
Associate editor at the Journal of Banking and Finance
Associate editor at the Review of Finance
Associate editor at the European Economic Review
My research sits at the intersection of macroeconomics, financial intermediation, and industrial organization, with a focus on firms' decisions and their aggregate implications.
I study the drivers of productivity growth, the real effects of financial frictions, and the role of real and nominal rigidities in business cycle fluctuations.
Publications
[Top ↻]
1. Zombie lending and policy traps
(with V. Acharya & O. Wang)
Review of Economic Studies
(Conditionally accepted)
[
Abstract] [
VoxEU]
We model how accommodative policy can become trapped due to credit
misallocation and its spillovers, as witnessed in Japan in the 1990s and in
Europe in the 2010s. Following large negative shocks, the effective lower bound
prevents stimulating bank lending through rate cuts. Unconventional policies
that subsidize risk-taking such as regulatory forbearance can still expand
credit, but excessive accommodation induces poorly-capitalized banks to lend to
low-productivity “zombie” firms. Due to persistent congestion externalities of
zombie lending on healthier firms, policymakers avoiding short-term recessions
can get trapped into protracted low rates, excessive forbearance, and persistent
output losses.
Viral V. Acharya, Simone Lenzu, and Olivier Wang. "Zombie lending and policy
traps" (2021).
@article{Acharya_etal2021,
title={Zombie lending and policy traps},
author={Acharya, Viral V, and Lenzu, Simone and Wang, Olivier},
journal={},
year={2021}
}
2. Financial shocks, productivity, and prices
(with D. Rivers & J. Tielens)
Review of Economic Studies
(Accepted)
[
Abstract]
We study the interconnection between the productivity and pricing effects
of financial shocks.
Combining administrative records on firm-level output prices and quantities with
quasi-experimental
variation in credit supply, we show that a tightening of credit conditions has a
persistent, yet delayed,
negative effect on firms’ long-run physical productivity growth (TFPQ) but also
induces firms to
change their pricing policies. Commonly used revenue-based productivity measures
(TFPR)—which
conflate price and productivity—offer biased predictions regarding the consequences
of financial
shocks for firms' productivity growth, underestimating the long-run elasticity of
physical productivity
to credit supply by half. We also show that the pricing adjustments themselves have
productivity
implications. Firms use low pricing as a source of internal financing, allowing them
to avoid cutting
expenditures on productivity-enhancing activities, thereby softening the impact of
financial shocks.
We incorporate these forces into a quantitative model of firm dynamics to quantify
the importance
of productivity and pricing dynamics (and their interplay) in driving the scarring
effects of financial
crises on aggregate productivity and welfare.
Lenzu, Simone, David Rivers, and Joris Tielens. "Financial shocks, productivity, and
prices" (2025).
@article{lenzu_etal2021,
title={Financial Shocks, Productivity, and Prices},
author={Lenzu, Simone and Rivers, David and Tielens, Joris},
year={2025}
}
3. Anatomy of the Phillips Curve: Micro evidence and
macro implications
(with L. Gagliardone, M. Gertler, & J. Tielens)
American Economic Review
, Vol. 115, No. 11, November 2025, Pages 3941–3974
[
Abstract]
[
Online appendix]
[
New
York Times] [
Liberty
Street Economics] [
VoxEU]
We develop a bottom-up approach to estimate the slope of the primitive
form of the New Keynesian Phillips curve, which features marginal cost as the real
activity variable. Using quarterly micro data on prices, costs, and output, we
estimate dynamic pass-through regressions that identify the slope as a function of
primitive parameters. We find a high slope for the cost-based Phillips curve, which
contrasts with the low estimates of the conventional output gap–based formulation
found in the literature. We reconcile by showing that the output elasticity of
marginal cost is low, at least during moderate inflation periods (e.g.,
pre-pandemic).
Gagliardone Luca, Mark Gertler, Simone Lenzu, and Joris Tielens. "Anatomy of the
Phillips Curve: Micro Evidence and Macro Implications," American Economic Review,
Vol. 115, No. 11, November 2025.
@article{GGLT_PC2025,
title={Anatomy of the Phillips Curve: Micro evidence and macro implications},
author={Gagliardone, Luca, ang Gertler, Mark, and Lenzu, Simone, and Tielens,
Joris},
journal={American Economic Review},
year={2025}
volume={115},
number={11},
pages={3941--3974},
year={2025}
}
4. Propagation and amplification of local productivity
spillovers
(with X. Giroud, Q. Maingi, & H. Mueller)
Econometrica
, Volume 92 (No. 5), September 2024, Pages 1589-1619
[
Abstract]
[
Online appendix]
[
VoxEU]
The gains from agglomeration economies are believed to be highly
localized. Using confidential Census plant-level data, we show that large industrial
plant openings raise the productivity not only of local plants but also of distant
plants hundreds of miles away, which belong to large multi-plant, multi-region firms
that are exposed to the local productivity spillover through one of their plants.
This "global" productivity spillover does not decay with distance and is stronger if
plants are in industries that share knowledge with each other. To quantify the
signifcance of frms' plant-level networks for the propagation and amplification of
local productivity shocks, we estimate a quantitative spatial model in which plants
of multi-region firms are linked through shared knowledge. Counterfactual exercises
show that while large industrial plant openings have a greater local impact in less
developed regions, the aggregate gains are greatest when the plants locate in
well-developed regions, which are connected to other regions through firms'
plant-level (knowledge-sharing) networks.
Xavier, Giroud, Simone Lenzu, Quinn Maingi, and Holger Mueller (2024): "Propagation
and amplification of local productivity spillovers," Econmetrica, 92, 1589–-1619.
@article{Giroud_etal2021,
title={Propagation and Amplification of Local Productivity Spillovers},
author={Giroud, Xavier and Lenzu, Simone and Maingi, Quinn and Mueller,
Holger},
journal={Econometrica},
volume={92},
number={5},
pages={1589–-1619},
year={2024}
}
5. Comment on "Trade and diffusion of embodied
technology: An empirical analysis"
Journal of Monetary Economics
, Volume 137, July 2023, Pages 146-149.
[
Abstract]
6. Sovereign debt exposure and the bank lending channel:
Impact on credit supply and the real economy
(with F. Mezzanotti & M. Bottero)
Journal of International Economics
, Volume 126, September 2020: 103328.
[
Abstract]
[
Ungated Version]
[
Online appendix]
[
Data and Code]
In the context of the European crisis, we examine the transmission of a
balance sheet shock to the real economy. Using Italian loan-level data, we show that
the shock to the banks' sovereign portfolio caused by the 2010 Greek bailout was
passed on to firms through a credit contraction. This was particularly the case for
banks with weaker balance sheet. The contraction in credit was similar for both
large and small firms, but it only negatively affected the investment and employment
decisions of smaller firms. These results confirm that banks' security portfolios
can be a source of economic fragility.
Bottero, Margherita, Simone Lenzu, and Filippo Mezzanotti. "Sovereign debt exposure
and the bank lending channel: Impact on credit supply and the real economy." Journal
of International Economics 126 (2020): 103328.
@article{bottero2020sovereign,
title={Sovereign debt exposure and the bank lending channel: Impact on credit supply
and the real economy},
author={Bottero, Margherita and Lenzu, Simone and Mezzanotti, Filippo},
journal={Journal of International Economics},
volume={126},
pages={103328},
year={2020},
publisher={Elsevier}
}
7. Pricing genius: The market evaluation of innovation
(with D. Galenson)
Journal of Applied Economics
, Volume 19, Issue 2, November 2016, Pages 219-248.
[
Huffington
Post] [
VoxEU] [
Business
Insider]
[
Abstract]
Economists have neglected a key issue for understanding and increasing
technological change, in failing to study how talented individuals produce
innovations. This paper takes a quantitative approach to this problem. Regression
analysis of auction data from 1965-2015 reveals that the age-price profiles of
Jackson Pollock and Andy Warhol - the two greatest painters born in the 20th century
- closely resemble the age profiles of the two artists derived both from textbooks
of art history and from retrospective exhibitions. The agreement of these sources
confirms that the auction market assigns the highest prices to the most important
art, and examination of the artists' careers reveals that this art is the most
important because it is the most innovative. These results lend strong support to
our understanding of creativity at the individual level, with a sharp contrast
between the extended experimental innovation of Pollock and the sudden conceptual
innovation of Warhol.
Galenson, David W., and Simone Lenzu. "Pricing genius: The market evaluation of
innovation." Journal of Applied Economics 19, no. 2 (2016).
@article{galenson_lenzu2016,
title={Pricing genius: The market evaluation of innovation},
author={Galenson, David W and Lenzu, Simone and others},
journal={Journal of Applied Economics},
volume={19},
number={2},
year={2016},
publisher={Universidad del CEMA}
}
8. Two old masters and a young genius: The creativity of
Francis Bacon, Lucian Freud, and Jean-Michel Basquiat
(with D. Galenson)
Journal of Cultural Economics
, 47, 489-511 (2023).
[
Abstract]
Francis Bacon, Lucian Freud, and Jean-Michel Basquiat were key figures in
the resurgence of expressive figurative painting in the late twentieth century. All
three made personal visual art, drawing their subjects from among the people and
things they cared most about. Yet they worked in very different ways, toward very
different goals. This paper considers how their differing motivations and methods
resulted in radically differing life cycles of creativity, measured both by auction
market outcomes and by the judgments of art scholars. The experimental art of Bacon
and Freud developed gradually and produced masterpieces late in their long lives,
whereas the conceptual Basquiat made his most innovative art well before his
premature death.
David Galenson and Simone Lenzu. "Two old masters and a young genius: The creativity
of Francis Bacon, Lucian Freud, and Jean-Michel Basquiat." (2023)
@article{Galenson_Lenzu2023,
title={Two old masters and a young genius: The creativity of Francis Bacon, Lucian
Freud, and Jean-Michel Basquiat},
author={Galenson, David, and Lenzu, Simone},
journal={Journal of Cultural Economics},
year={2023}
}
9. Systemic risk on different interbank network
topologies
(with G. Tedeschi)
Physica A
, Volume 391, Issue 18, 15 September 2012, Pages 4331-4341.
[
Abstract]
In this paper we develop an interbank market with heterogeneous
financial institutions that enter into lending agreements on different network
structures. Credit relationships (links) evolve endogenously via a fitness mechanism
based on agents' performance. By changing the agent's trust on its neighbor's
performance, interbank linkages self-organize themselves into very different network
architectures, ranging from random to scale-free topologies. We study which network
architecture can make the financial system more resilient to random attacks and how
systemic risk spreads over the network. To perturb the system, we generate a random
attack via a liquidity shock. The hit bank is not automatically eliminated, but its
failure is endogenously driven by its incapacity to raise liquidity in the interbank
network. Our analysis shows that a random financial network can be more resilient
than a scale free one in case of agents' heterogeneity.
Lenzu, Simone, and Gabriele Tedeschi. "Systemic risk on different interbank network
topologies." Physica A: Statistical Mechanics and its Applications 391, no. 18
(2012): 4331-4341.
@article{lenzu_tedeschi2012,
title={Systemic risk on different interbank network topologies},
author={Lenzu, Simone and Tedeschi, Gabriele},
journal={Physica A: Statistical Mechanics and its Applications},
volume={391},
number={18},
pages={4331--4341},
year={2012},
publisher={Elsevier}
}
Working papers
[Top ↻]
1. The cost and shadow cost of credit
(with F. Manaresi and A. Taburet)
Review of Corporate Finance Studies
(Revise and Resubmit)
[
Abstract]
Using a novel micro-level dataset on firms' production and financing
decisions, we
estimate the distribution of firm—specific financial wedges in capital
accumulation
due to binding borrowing constraints—the shadow cost of credit—and compare these
to observed market price of credit—the borrowing rate. We find that shadow costs
are significantly higher, more dispersed, and more sensitive to variations in
credit
risk factors than borrowing rates. Our analysis also reveals a high sensitivity
of firms' investment to shadow costs, indicating that credit rationing, rather
than
elevated borrowing costs, is the primary channel through which credit market
frictions
distort investment policies and capital allocation, particularly for small and
medium
enterprises.
Lenzu Simone, Francesco Manaresi, and Arthur Taburet. "The cost of shadow cost
of credit" (2025).
@article{Lenzu_Manaresi2025,
title={The Cost of Shadow Cost of Debt},
author={Lenzu, Simone, and Manaresi, Francesco, and Taburet, Arthur},
journal={},
year={2022}
}
2. Artificial intelligence and monetary policy: A
framework and perspective on cyclical transmission, structural transition, and
financial stability
International Journal of Central Banking
(Revise and Resubmit)
[
Abstract] [
Liberty
Street Economics]
I analyze different channels through which the diffusion of artificial intelligence (AI) could impact the conduct of monetary policy, distinguishing between its effects on cyclical transmission, structural transition, and financial stability. In the short run, AI alters inflation dynamics through its effect on marginal costs and expectations; over longer horizons, it may shift potential output and the natural rate of interest. It can also heighten financial vulnerabilities through inflated asset valuations and model monocultures. A particular risk is that AI depresses realized efficiency while fueling elevated valuations at once, so rate tightening that addresses cost-push inflation triggers a sharp valuation correction—moving both targets in opposite directions under a single instrument. AI does not call for a redefinition of central banks’ objectives. It does require recalibrating existing frameworks toward real-time cost-side diagnostics, drawing on micro-level data on production costs, pricing behavior, and adoption dynamics.
Lenzu, Simone. "Artificial intelligence and monetary policy: A framework and
perspective on cyclical transmission, structural transition, and financial stability."
(2026).
@article{lenzu_AI_MP,
title={Artificial intelligence and monetary policy: A framework and perspective
on cyclical transmission, structural transition, and financial stability},
author={Lenzu, Simone},
year={2026}
}
3. Micro and macro cost-price dynamics in normal
times and during inflation surges
(with L. Gagliardone, M. Gertler, & J. Tielens)
Review of Economic Studies
(Revise and Resubmit)
[
Abstract] [
VoxEU]
[
Liberty
Street Economics]
4. Sources and implications of resource
misallocation: New evidence from firm-Level marginal products and user costs
(with F. Manaresi)
[
Abstract] [
Appendix]
Using micro-data on firm-specific borrowing costs and wages, we
demonstrate that distortions in firms'? employment and investment policies can
be empirically measured using firm-level gaps between marginal revenue products
and user costs (MRP-cost gaps). We estimate MRP-cost gaps for 4.7 million
firm-year observations in Italy between 1997 and 2013, showing the variation in
these measures is closely related to the extent of credit market frictions and
to regulations that impose implicit costs of labor that vary as a function of
firm size. Using the estimated MRP-cost gaps, we assess the scope of capital and
labor misallocation in Italy, and its impact on aggregate output and total
factor productivity (TFP). We calculate that, holding constant the aggregate
capital and labor endowments in the economy, the Italian corporate sector could
produce 6% to 8% more output by reallocating resources toward higher-value
users. The output losses from misallocation are larger (i) during episodes of
macro-financial instability, (ii) in non-manufacturing industries, (iii) in
geographical regions with less developed socioeconomic institutions and (iv)
among high-risk firms. We highlight an important gain/risk tradeoff: Output/TFP
gains from reallocation might come at the expense of increasing the volatility
of the economy and the fragility of the credit system because maximizing
reallocation gains requires a transfer of resource from large, old, and low-risk
firms toward small, young, and high-risk firms.
Lenzu, Simone, and Francesco Manaresi. "Sources and implications of resource
misallocation: New evidence from firm-Level marginal products and user costs."
Available at SSRN 3068160 (2019).
@article{lenzu2019sources,
title={Sources and implications of resource misallocation: New evidence from
firm-Level marginal products and user costs},
author={Lenzu, Simone and Manaresi, Francesco},
year={2019}
}
5. An odd approximation of inflation for monetary
policy analysis
(with A. Ebsim, L. Gagliardone, M. Gertler, & J. Tielens)
(Draft available upon request)
[
Abstract]
We derive an analytical approximation of a standard class of
state-dependent pricing models with smoothly distributed menu costs. The
approximation, derived from first principles, preserves the key economic forces
of state-dependent pricing—movements in the frequency of price adjustment
and the selection effect—while collapsing the aggregate state from the
full cross-sectional distribution to a single aggregate scalar. The
dimensionality reduction allows models that would otherwise require global
solution methods to be solved with standard perturbation techniques.
Our approximate model closely replicates the impulse responses of the globally
solved model across shock sizes, and accurately tracks the transitional dynamics of
inflation and frequency of price adjustment. Filtering US and EU data through
the model's lens, we recover the history of shocks that rationalize the
aggregate data and document the endogenous (nonlinear) steepening of the
Phillips curve during the 2021–22 surge. Counterfactual exercises using
the recovered shocks show that aggressive monetary tightening curbs inflation
at no greater output cost than a passive stance—and increasingly so the
larger the cost-push shock—a result linear models systematically
miss.
6. Additive firm's dynamics
(with T. Philippon & J. Tielens)
(Draft coming soon)
[
Abstract]
---
Work in progress
[Top ↻]
1. A marginal cost index for the United States
(with L. Gagliardone, M. Gertler, & H. Han)
2. A early assessment of the adoption, use, and impact of
GenAI on firms' production, productivity, and profitability
(with Mezzanotti & Tielens)
3. Customer capital, market Shares, and financing
conditions
(with A. Sufi & J. Tielens)
4. Selling bad loans
(with M. Bottero, F. Mezzanotti, & GP. Parise)
Media outreach
[Top ↻]
My talk on AI and central banking at the ECB ChaMP conference
-
July 6 2026
AI and monetary policy: it’s complicated
-
Financial Times (Unhedged), May 27 2026
AI’s Macroeconomic Challenges and Promises
-
Liberty Street Economics, May 20 2026
Does the Phillips Curve Steepen When Costs Surge?
-
Liberty Street Economics, February 5 2026
Anatomy (not Autopsy) of the Phillips Curve
-
Liberty Street Economics, February 4 2026
Micro and macro cost-price dynamics in normal times
and during inflation surges
-
VoxEu, June 6 2025
Anatomy of the Phillips curve
-
VoxEu, June 5 2025
Why inflation jumps
-
New York Times, June 28 2023
Propagation and amplification of local productivity
spillovers
-
VoxEu.org, December 1 2021
Zombie lending and policy traps
-
VoxEu.org, October 29 2021
Pricing genius
-
Huffington Post, December 6 2017
Pricing genius
-
Business Insider, August 21 2015
Pricing genius
-
VoxEu.org, August 19 2015
Current and former students
[Top ↻]
Pietro Reggiani (2022, Cornerstone Research)
Quinn Maingi (2023, USC Marshall)
Luca Gagliardone (2024, Yale Cowles foundation postdoc)
Yannis Cabossioras (2024, Federal Reserve Board)
