Dr Antonio Mele

Research Interests

Antonio's research interests are in macroeconomics, especially in dynamic contracts, fiscal and monetary policy, learning, and computational methods. His current research is about optimal monetary policy with learning, strategic default, international risk sharing, and unemployment insurance schemes. 

Personal homepage.

Working papers:

“The suboptimality of commitment equilibrium when agents are learning” (joint with Krisztina Molnar and Sergio Santoro)
The optimal monetary policy under commitment is always Pareto superior to the one under discretion if agents have rational expectations. Moreover, if agents' beliefs slightly deviate from rational expectations, the economy can be driven to the rational expectations commitment equilibrium if the monetary authority follows a specific policy. In this paper, we show that a benevolent rational and committed central bank will never drive the economy to the rational expectation commitment equilibrium when private agents are learning. The best policy is to make people learn the discretionary equilibrium instead. This is surprising, since it is well known that the discretionary equilibrium suffers from the stabilization bias.

“Dynamic risk sharing with moral hazard”
I characterize the optimal risk sharing contract in dynamic economies with moral hazard. In a full information environment, an optimal contractual arrangement prescribes that agents pool their income and divide it according to a constant sharing rule. When moral hazard is present, the sharing rule changes through time in order to reward effort. As a consequence, consumption inequality is very persistent. If agents have access to unmonitorable assetmarkets, then they can use their assets to smooth consumption and reduce effort. An optimal contract would avoid that, by imposing an additional cost (a wedge) on savings. As a result, trading in the asset market is restricted: the planner prevents both excessive aggregate savings and excessive aggregate borrowing.

“Unemployment insurance, human capital and financial markets”
I characterize optimal unemployment insurance in the presence of human capital life-cycle trends and incomplete financial markets. Each worker is subject to unemployment risk, and exerts unobservable effort either to keep her job (if employed) or to find one (if unemployed). Human capital accumulates when she is employed, while depreciates when unemployed. She has access to financial (incomplete) markets, where she can buy or sell risk-free bonds at a constant interest rate to self-insure against unemployment risk. Trading in the financial market is not observable. Numerical examples show that the optimal system has a decreasing but almost flat subsidy, financed by an almost constant payroll tax.

“Money and development” (joint with Radek Stefanski)
The inverse of velocity of money - the share of money in GDP - increases with income. We argue that this drop in velocity takes place because of a process of structural transformation - a shift of the economy away from agriculture towards non-agriculture. In particular we argue that agricultural goods in poor countries are characterized by a large degree of barter trade, whilst non-agricultural goods require money. We then explore the impact of varying interest rates on the start of structural transformation. We show that, in the data, governments of poorer countries tend to set higher nominal interest rates. Since, a positive nominal interest rate acts as a tax on cash-goods, agents substitute away from (monetary) non-agricultural products towards (non-monetary) agricultural products and thus delaying structural transformation. If TFP growth rates are low in the agricultural sector and high in the non-agricultural sector, there is an additional cost to deviations from the Friedman Rule (i.e. zero nominal interest rates) - a delay in structural transformation which results in lower growth rates.

Research in progress

Optimal Taxation of Families (joint with Luigi Balletta)

Strategic Default

Debt and Equity dynamics at the firm and at the aggregate level (joint with Andrea Caggese)

Risk sharing, moral hazard and survival

A simple theory of the Stability Pact


  • ECO1019: Principles of Macroeconomics
  • ECO2048: Economic Analysis with Matrices.

Departmental Duties

  • SSLC member
  • Surrey Economics Seminars organizer

Contact Me

Phone: 01483 68 2774

Find me on campus
Room: 22 AD 00

My office hoursBy e-mail appointment


“Repeated moral hazard and recursive Lagrangeans”, Journal of Economic Dynamics and Control, Volume 42, May 2014, Pages 69-85

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