Research interests: Macroeconomics, Fiscal Policy, Monetary Policy, Macro-Labor, Development Economics, Demographics.
Select Peer-Reviewed Publications
Sentimental business cycles with Evi Pappa and Morten Ravn, Review of Economic Studies, 2022.
with Online Appendix and Dataset on Mass Shootings in the United States, 1965-2019.
Does economic security really impact on gun violence at U.S. schools? with Evi Pappa and Morten Ravn, Nature Human Behaviour, 2019. Supplementary Information can be found here along with table replication files here.
Do labor market institutions matter for business cycles? with Stefano Gnocchi and Evi Pappa, Journal of Economic Dynamics and Control, 2015.
Other Publications
Can Healthy Aging Boost Labor Supply? Evidence from Korea with B. Gruss, E. Huang, D. Noureldin, and K. Ozhan, KDI Journal of Economic Policy, forthcoming. (IMF Working Paper version available)
The Rise of the Silver Economy: Global Implications of Population Aging with B. Gruss, E. Huang, D. Noureldin, and K. Ozhan, IMF World Economic Outlook, Chapter 2, April 2025.
World Bank-IMF Spring Meetings 2025 Analytical Corner presentation.
Green fiscal rules? Challenges and policy alternatives with F. Caselli and P. Medas, IMF Working Paper, 2024. Blog in SUERF.
The return to fiscal rules with F. Caselli, C. Goncalves, G. Hong, P. Medas, A.Nguyen, IMF Staff Discussion Notes, 2022.
Reforming the EU fiscal framework: Strengthening the fiscal rules and institutions with A. Balakrishnan, B. Barkbu, H. Davoodi, W. Lam, P. Medas, J. Otten, L. Rabier, C. Roehler, A. Shahmoradi, M. Spector, S. Weber, and J. Zettelmeyer, IMF Departmental Paper, 2022.
Fiscal rules and fiscal councils: Recent trends and performance during the COVID-19 pandemic with H. Davoodi, P. Elger, A. Fotiou, D. Garcia-Macia, X. Han, W. Lam, P. Medas, IMF Working Paper, 2022.
Strengthening the credibility of public finances, with R. Espinoza, H. Adan, C. Alonso, B. Battersby, C. Goncalves, G. H. Hong, R. Perrelli, and A. Sayegh, IMF Fiscal Monitor, Chapter 2, International Monetary Fund, April 2021.
Smart containment: Lessons from countries with past experience with Alexandra Fotiou, CEPR Covid Economics, 2021.
A fair shot, with D. Amaglobeli, J. M. Fournier, F. Brollo, C. Chen, M. Coelho, and Y. Xiao, IMF Fiscal Monitor, Chapter 2, International Monetary Fund, April 2021.
Fiscal policies to address the Covid-19 pandemic , w. P. Medas, J. Ralyea, E. Ture, P. Elger, A. Fotiou, J. M. Fournier, R. Lam, D. Prady, and B. Shang, IMF Fiscal Monitor, Chapter 1, International Monetary Fund, October 2020.
Estimating an equilibrium exchange rate for the Argentine Peso with A. Coppola and Z. Mustafaoglu, World Bank Policy Research Working Paper, 2016.
Can sustainable poverty reduction be achieved with little or no economic growth? The case of Jamaica, with Denis Medvedev, Zafer Mustafaoglu and Michiel Paris, Review of Economics and Institutions, 2013.
Ongoing Research
A Silver Lining in the Silver Economy: Macroeconomic Implications of Healthy Aging (with B. Gruss, E. Huang, D. Noureldin, and K. Ozhan, forthcoming IMF Working Paper)
This paper investigates whether improvements in older adults’ health can mitigate the growth slowdown and rising fiscal pressures induced by population aging. We integrate detailed microdata analysis with a multi-country, heterogeneous-agent overlapping-generations general equilibrium model. Empirically, we document substantial gains in cognitive capacity among individuals aged 50 and older, which translate into higher earnings, greater labor-force participation, and increased hours worked. In our model simulations, these healthy-aging trends contribute about 0.4 percentage point to global GDP growth over 2025–2050, partially counteracting the drag from population aging. We then simulate a healthier-aging policy—modeled as a gradual convergence of older adults’ cognitive health to Swedish benchmark levels—and compare its impact with measures to raise female labor-force participation and extend effective retirement ages across economies. Our findings indicate that converging to Swedish-level healthy aging could alone boost global average annual GDP growth by roughly 0.2 percentage point in the twenty-first century, complementing other labor-market reforms in mitigating the economic drag from aging.
Labor Market Implications of Healthy Aging (with B. Gruss, E. Huang, D. Noureldin, and K. Ozhan, forthcoming IMF Working Paper)
This paper provides new cross-country evidence on “healthy aging”—the extent to which populations age in better health across birth cohorts—and how this shapes labor market outcomes for older workers. Using harmonized microdata focused on older populations in 41 countries during 2000-22, our findings reveal (i) a broad-based healthy aging phenomenon, whereby older-age physical, cognitive, and mental health have improved systematically across birth cohorts, and (ii) that better health—instrumented by the incidence of chronic diseases—raises labor earnings, labor productivity, and labor supply along both extensive and intensive margins. Quantitatively, a decade of cohort-on-cohort improvements in health—particularly for cognitive abilities—is estimated to have raised older individuals’ probability of labor force participation by about 20 percentage points, their weekly hours worked by around 6 hours, and their productivity by around 30 percent. Together, our results highlight that healthy aging can generate sizeable labor market dividends for the older-age population.
Electricity subsidy reform in Argentina: Fiscal and distributional implications (with J. Hooley and F. Machado, forthcoming IMF Working Paper)
Electricity subsidies in Argentina at 1.4 percent of GDP in 2022 are the highest in Latin America and tariffs among the lowest. In the context of Argentina’s fiscal consolidation, in October 2022 the government introduced a new tariff segmentation scheme which increased the wholesale electricity price to cost recovery levels for high income users with smaller increases for low- and middle-income consumers. We estimate the fiscal and distributional implications of the scheme and compare it to alternative reform options using household expenditure survey data. We find that while introduction of the segmentation scheme was progressive, fiscal savings were limited/negative. Targeting of subsidies could be improved, whereby alternative reform options could shield vulnerable households while yielding fiscal savings of around 2 percent of GDP.
Fiscal rules and countercyclicality (with F. Caselli)
This paper provides new empirical evidence on the countercyclicality of fiscal rules in response to recessions. We estimate panel local projections for 71 advanced and emerging markets spanning 1985—2019. Endogeneity concerns are addressed using: (i) a difference-in-difference estimation, and (ii) a multi-treatment effect methodology that jointly models the probability of entering a recession and adopting a fiscal rule. On average, fiscal policy is found to be procyclical, as evidenced by countries reducing government spending in recessions and their aftermath, with no difference detected across countries with or without fiscal rules. However, for the subsample of advanced economies, fiscal rules are found to increase fiscal policy procyclicality, led by cuts in current spending and driven by countries with limited fiscal space relative to the rule limits. Procyclicality is mitigated for flexibly designed rules and when rules successfully incentivize countries to build buffers.
Climate sentiment shocks (w. J. N. Rosas)
We provide new empirical evidence on the dynamic causal effects of climate-related negative expectation shocks. We identify exogenous variation in U.S. consumer confidence expectations using natural disaster damages occurring abroad as an instrument. Our instrument sets off a deterioration in consumer sentiments about the economy. In turn, a negative climate sentiment shock is recessionary, triggering a persistent decline in consumer confidence and a contraction in both industrial production and the labor market. Simultaneously, consumer prices rise, akin to the effects of a negative supply shock. Monetary policy responds primarily to the output gap rather than inflation, further amplifying price effects. Macroeconomic uncertainty increases, and real stock prices decline with a lag, distinguishing this shock from standard uncertainty and news shocks in the literature. Finally, we show that climate sentiment shocks account for a non-negligible portion of cyclical fluctuations in consumer confidence and key real macroeconomic aggregates.
Confidence and local activity: An IV approach
This paper provides new empirical evidence that “animal spirit” sentiment shocks have real effects that are short-lived. It studies the economic impact of changes in sentiment using individual level monthly data on confidence regarding U.S. output growth spanning 2000-2017. Overcoming the problem that most variations in confidence are endogenous to the economic cycle, I exploit that school shootings constitute a natural experiment to study the effect of exogenous movements in confidence that are orthogonal to fundamentals of the economy. School shootings generate significant drops in consumer confidence for residents in the county of the shooting. Such exogenous drops in sentiment are found to reduce consumer buying attitude for durable goods. At the aggregate county level, negative sentiment shocks are found to raise unemployment rates, but effects are short-lived lasting less than one year. Using an instrument for confidence is important to deal with measurement error and endogeneity; without taking this into account sentiment shocks effects on buying attitudes extend to larger items (cars and houses) and effects on unemployment are long-lasting up to three years.
Do stock market booms anticipate baby booms?
This paper studies the procyclical nature of fertility in the U.S. employing a VAR and DSGE perspective. I find that fertility responds positively to: (i) current economic conditions—TFP shocks and (negative) unemployment shocks, as well as to (ii) expectations about future economic conditions—consumer confidence expectations and stock price news shocks. I complement these results with a DSGE model that incorporates fertility into a simple RBC model. Fertility is irriversible, children provide households with utility, and are associated with costs of two types: consumption—entering the budget constraint, and time—away from leisure and work. The model proposes two channels causing fertility to be procyclical. First, fertility turns out to be procyclical when the consumption cost of children is high, but becomes countercyclical when their cost is low. Second, I aim to extend this model by introducing credit frictions and analyzing a role for policy in attaining optimally countercyclical fertility, in the spirit of the education literature. If agents had access to perfect credit markets they would choose to forgo working during recessions when childbearing costs are lower (substitution effects would dominate income effects) but under credit constraints childbearing becomes procyclical.
Do labor market institutions matter for fertility? with A. Camilli, EUI Working Paper, ECO 2017/07.
Using annual data for 20 OECD countries over the period 1961-2014, we study whether labor market institutions (LMIs) not targeted to maternity impact the total fertility rate (TFR). We distinguish between employment rigidities (ER) and real wage rigidities (RWR), since the former reduces and the latter amplifies the response of the business cycle to shocks. Panel regressions and principal component analysis reveal that ER, such as employment protection and union strength, increase TFR. On the other hand, RWR, proxied by the centralization of wage bargaining and unemployment benefits, reduce TFR. We also find evidence that unemployment volatility reduces fertility whereas wage volatility raises fertility. Thus, to the extent that labor market institutions affect unemployment and wage volatility, they may also affect fertility. We complement our analysis with a DSGE model that incorporates households' fertility decision as well as unemployment and wage rigidities. We find that downward wage rigidities amplify real contractions in response to negative demand shocks and lead to large drops in employment and fertility.
Missing inflation in the Eurozone: shocks or structural changes? (with J. Grip, B. Kolb and C. Montes-Galdón)
Inflation in the euro area has been far below the ECB’s target since 2013. This paper investigates the relative contributions of economic shocks and structural changes in explaining these inflation dynamics. To this end, we estimate an open-economy New Keynesian DSGE model at 2nd order employing the estimation method of Kollmann (2015), which is a recent improvement over the increasingly popular particle filter for nonlinear models. The model economy has search and matching on the labour market and asymmetric adjustment costs for investment, wages and employment as in Abbritti and Fahr (2013), an open-economy setting with incomplete pass-through of foreign prices as in Justiniano and Preston (2010), and frictions and shocks similar to Smets and Wouters (2007). We allow for time-varying parameters that can be mapped into labor and product market reforms in the Eurozone.