Yared's research spans three main trajectories in macroeconomics: government debt and fiscal policy, the international role of the U.S. dollar and military power, and central banking and inflation. His academic work is closely aligned with his public commentary and policy engagement, particularly on the subject of U.S. fiscal sustainability.
Government debt and fiscal policy Yared has written extensively on the political economy of fiscal policy. In his 2019 article “Rising Government Debt: Causes and Solutions for a Decades-Old Trend,” he examined the growth of public debt in advanced economies since the 1980s, arguing that it stems from rising government spending. In the United States, he identified the expansion of
entitlement programs, such as
Medicare and
Social Security, as the primary driver of debt growth, rather than tax cuts, and he noted similar patterns in other advanced economies. Yared argued that
normative macroeconomic theories cannot explain these patterns. He linked these patterns to demographic and political forces, resulting in rising political polarization and electoral uncertainty, which makes spending restraint more difficult. Yared has also argued that mounting debt inhibits the United States’ ability to respond to global crises, potentially undermining the dollar's
reserve currency status and posing significant long-term risks to global leadership. He has advocated for gradual reforms that simultaneously incorporate entitlement restructuring and broadening the tax base, citing
Sweden's fiscal adjustment in the 1990s as an example. while later work examined optimal fiscal rules with threshold-based penalties under limited enforcement.
Dollar and military dominance In a 2024 article, Yared presented a
game-theoretic framework that he has developed with
University of Chicago professor Carolin Pflueger, which shows that military power and the financial privilege of a dominant currency reinforce one another. The model demonstrates that militarily dominant countries benefit from a funding advantage in the form of lower government bond yields, which helps those hegemonic countries to sustain their power advantage and win wars. In the case of the United States, its military strength reassures investors about asset safety, supporting the dollar's reserve currency status and enabling lower borrowing costs. In turn, the U.S. financial dominance allows for a more efficient defense financing. The authors argued that this dynamic contributes to the U.S.'s
exorbitant privilege in the global market. However, they also warned of the system's fragility, noting that rising debt, fiscal gridlock, or alternative reserve currencies could weaken the U.S. position. Yared connected this analysis to broader fiscal policy concerns, arguing that debt sustainability affects national security. The authors argued that the disinflationary environment of the late 20th and early 21st centuries was supported by structural forces associated with the
Washington Consensus, such as
globalization, market liberalization, de-unionization, and fiscal restraint, combined with reforms that enhanced central bank independence and inflation targeting. The authors used a dynamic
New Keynesian model to analyze these mechanisms, incorporating political economy frictions. It also warns that political constraints may lead to greater inflation volatility in the coming years. == Government service ==