Research

Publications:

• "The Finances of Chilean Households during the pandemic: an assessment from the 2021 Household Financial Survey" (with Magdalena Cortina, Alejandra Inzunza, Felipe Martínez and Patricio Toro), Latin American Journal of Central Banking (2025). [open access]

The policies adopted in Chile to mitigate the impact of the Covid-19 pandemic stand out for their magnitude: they implied an increase in the liquidity of the household sector of 29% of the 2019 GDP in an interval of 18 months. We use the 2021 Chilean Household Financial Survey to assess the impact of the pandemic and the massive liquidity shock generated by the policy response on financial decisions and the financial situation of Chilean households. We find that households used the additional liquidity to recover their consumption levels, reduce debt, and accumulate liquid assets. Once the support measures were phased out, households retained buffers, allowing them to maintain a high level of expenditure despite unfavorable macroeconomic changes. Finally, we document that the ultimate effect of the implemented policies was a deterioration in households' financial conditions, particularly for those with lower income.

Working papers:

• “Consumption Insurance over the Life Cycle” (with Tomás Cortés) [pdf]

This paper studies the amount of consumption insurance present in Spanish households. We take advantage of the Spanish Household Budget Survey, which collected detail panel data on consumption and income at the quarterly frequency between 1985 and 1996. We document the joint dynamics of consumption and income for Spanish households over the life cycle. We find that the ability of households to smooth income shocks changes sharply with age. In particular, the transmission of permanent shocks to consumption decreases with age, from full transmission at 25 to less than 40% at 60. In turn, the transmission of transitory shocks is low throughout the life cycle. Our results are broadly consistent with canonical life-cycle models of self-insurance, where the patterns emerges from the combination of increasing willingness and ability to smooth persistent shocks as households age. We illustrate this result by calibrating a quantitative model to Spain.

• “Financial Constraints and Firm Adjustments during a Sales Disruption” (with Juan-Andrés Castro) [pdf]

We address two main questions: (i) how do firms respond to an unanticipated shock to their cash flows, and (ii) what is the role of financial constraints in mediating such response? To answer these questions, we study the behavior of Chilean firms during the 2019 social unrest, which caused a series of disruptions to the firms' activity over several months. Exploiting quasi-experimental variation in the exposure of firms to these incidents, we find that more exposed firms experience larger declines in sales, larger employment losses, and are more likely to fall behind in their financial obligations than less affected firms. Moreover, these responses are significantly stronger for those firms more likely to be financially constrained. A back-of-the-envelope calculation suggests that constrained firms translate almost half the decline in sales into lower demand for labor and intermediate inputs, more than double the transmission of unconstrained firms.

• “Durable Goods, Borrowing Constraints and Consumption Insurance” (with Josep Pijoan-Mas) [pdf]

In this paper we study the transmission of income shocks into nondurable consumption in the presence of durable goods. We build a two-good model to characterize the interaction of durability of goods, durability of shocks, and borrowing constraints as determinants of shock transmission. We show that borrowing constraints lead to a basket rebalancing effect, which biases the measures of insurance based on the consumption responses to shocks. The sign of this rebalancing depends critically on the persistence of the shock. We calibrate the model economy to the US in order to measure the size of this bias.

Work in progress:

• "Household Liquidity Shocks, Debt Repayment and Portfolio Choice" (with Tomás Cortés and Patricio Toro)

• “Machine Learning Models of Firm Arrears” (with Juan-Andrés Castro)

Older research:

• “Consumption Patterns and Employment Status”

• “The Financial Accelerator in a Dual Small Open Economy” [2008 (Master Thesis)]

Policy documents:

• "Efectos de la pandemia en las finanzas de los hogares chilenos" (with Alejandra Inzunza and Patricio Toro) [Suplementary Briefs, Financial Stability Report 2023H1 (in Spanish) ]

• "Efectos causales de los retiros previsionales en el endeudamiento bancario de los hogares" (with Tomás Cortés and Patricio Toro) [Suplementary Briefs, Financial Stability Report 2023H1 (in Spanish) ]

• “Modelos predictivos de impago y recuperación de préstamos a empresas” (with Juan-Andrés Castro, Jorge Fernández B. and Francisco Vásquez L.) [Suplementary Brief, Financial Stability Report 2019H2 (in Spanish) ]

• “Propuesta de actualización del cuestionario EFH 2020” (with Miguel Ampudia Fraile) (in Spanish)