Research interests: Macroeconomics, Fiscal Policy, Monetary Policy, Macro-Labor, Development Economics, Demographics.
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.
Smart containment: Lessons from countries with past experience with Alexandra Fotiou, CEPR Covid Economics, 2021.
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.
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.
Other Publications
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.
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.
Do labor market institutions matter for fertility? with A. Camilli, EUI Working Paper, ECO 2017/07.
Estimating an equilibrium exchange rate for the Argentine Peso with A. Coppola and Z. Mustafaoglu, World Bank Policy Research Working Paper, 2016.
Ongoing Research
Does healthy aging enable working for longer? (with B. Gruss, E. Huang, D. Noureldin, and K. Ozhan)
Climate sentiment shocks (w. J. N. Rosas)
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.
Confidence and local activity: An IV approach (Job Market Paper, 2018)
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.
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.