first model that merged the Aiyagari model of incomplete markets with a New Keynesian model of nominal rigidities. In 2016, he published the first business-cycle model that merged the Krusell-Smith model of business cycles with the Christiano–Eichenbaum–Evans model of monetary policy. These models were later baptized HANK, or Heterogeneous Agent New Keynesian Models. Central bank solvency In 2013, with Robert E. Hall, Reis invented the concept of central bank insolvency to describe the impact of possible losses from quantitative easing programs. The misallocation hypothesis of slumps and crashes In 2013, Reis proposed the misallocation hypothesis for the European slump and crash. It contends that by joining the eurozone, countries in the European periphery enjoyed large capital inflows, but their underdeveloped financial and political systems misallocated this capital leading to a slump in productivity and sowing the seeds of the crisis. Fast financial integration without financial depth creates a slump and a crash. Some accounts of why low real interest rates can be causing misallocation and low productivity build on his idea. QE and satiating the market for reserves In 2016, at the Kansas City Federal Reserve economic policy symposium, Reis proposed that a central bank's balance sheet should be just large enough to satiate the demand for bank reserves. In modern monetary systems, where deposits at the central bank are the key monetary instrument, ensuring that the deposit rate equals the private interbank rate achieves the Friedman rule. Automatic stabilizers In 2016, with Alisdair McKay, Reis showed that automatic stabilizers can be very effective by reducing the need for precautionary savings at the start of recessions. References External links Official website at the LSE The Phillips lecture 1978 births Living people 21st-century Portuguese economists Alumni of the London School of Economics Harvard University alumni New Keynesian economists Academics of the London School of Economics Fellows of the Econometric Society