UCC grad’s research making noise in U.S. finance

Along with Aaron Klein, Cui co-authored Quantitative Easing and Housing Inflation Post-COVID, a paper published in October by the Brookings Institution, a Washington, D.C.-based organization that supports nonpartisan research to improve policy and governance. Klein is former chief economist for the U.S. Senate Banking, Housing and Urban Affairs Committee.

Jerome Powell, chair of the Federal Reserve, referenced the paper in a speech before the National Association for Business Economics in Philadelphia. The paper points to evidence that the Fed’s large-scale purchase of mortgage-backed securities (known as quantitative easing) — a measure undertaken during the pandemic to lower interest rates and stimulate the economy — led to an increase in housing prices and overall inflation. 

Cui is a third-year student at Dartmouth College in Hanover, New Hampshire, where he studies economics and quantitative social science. He spoke to UCC News.

How did you end up working with Aaron Klein?    

 

He’s a Dartmouth alum, and a senior fellow at the Brookings Institution. There’s an intern placement program through Dartmouth called First-Year Fellows, and I worked as his research intern.

 

We looked at the data and found that the Fed bought nearly 90 per cent of the increase in agency mortgage-backed securities. At the same time, we saw this sharp rise in U.S. home values of $100,000 on average. We looked at the difference between the yields on other highly rated securities versus mortgage-backed securities. We found there was a compression of the rates during this period and the rate spread increased significantly, showing some impact through that channel. 

We also looked at alternative explanations [for housing inflation] that Chair Powell mentioned, and found they didn’t sufficiently explain the trend that was occurring. 

 

I was acting as co-author, both on the organization and conceptualization. We started with so many ideas and lots of data — maybe 20 charts — and we had to try to put that together in a cohesive piece. That was something I worked on with Aaron, and I did a lot of the data work. 

 

I was looking around at some economics stuff, and just stumbled across it. Being cited in the speech was amazing, and I’m grateful for the recognition. The speech was significant in that it was essentially the first reflection the Fed has had on its QE program. He acknowledged that the Fed could have, and perhaps should have, stopped asset purchases sooner. I’m hopeful the conversation continues from here.

Absolutely. Throughout my exploration of courses at the College, I always loved anything related to the social sciences. I remember Year 9 history and geography in Year 8, and I loved those courses. And then in the IB Programme I took higher-level economics with Craig Parkinson and standard-level global politics with Christin Mohammed-King, and those courses were my favourites. I knew from there that I wanted to move in this direction.

 

I like to keep as many doors open as possible. I’m looking at doing an economics PhD. I also potentially have a wonderful opportunity for an internship at Cornerstone Research next summer. We’ll see if that blossoms into a longer-term career. There’s lots of interesting work to do on that front.