Iván Alfaro


Department of Finance

BI Norwegian Business School

Nydalsveien 37, 0442, Oslo, Norway


ivan.alfaro[at] bi [dot] no

I am an Assistant Professor of Finance at BI Norwegian Business School in Oslo, Norway. I graduated with a Ph.D. in Finance from the Fisher College of Business, The Ohio State University. My research interest is in the effects of uncertainty on firms and households and international finance.

I have refereed for the Journal of Political Economy, The Review of Financial Studies, The Journal of Financial Economics, Management Science, Journal of Empirical Finance, Economics Letters, International Economic Review, Financial Innovation.

I hold a MBA degree, completed jointly at INCAE Business School (Costa Rica) and IE Business School (Madrid), and a BS in Engineering and Computer Science from Galileo University. Prior to my Ph.D I worked for 3 years as Country Manager for an international investment fund based in the Netherlands. I am happily married with a baby boy son in a fully-bilingual household (English and Spanish + Norwegian), and am a vivid coder in multiple programming languages.


  • The Ohio State University - Ph.D. in Finance, 2017

  • INCAE Business School - MBA, 2007

  • IE Business School - International MBA Exchange Program, 2006

  • Galileo University - B.S., Engineering and Computer Science, 2005

Academic Research - Working Papers

Abstract: We show how real and financial frictions amplify, prolong and propagate the impact of uncertainty shocks. We first use a novel instrumentation strategy to address endogeneity in estimating the impact of uncertainty, by exploiting differential firm exposure to exchange rate, policy, and energy price volatility in a panel of US firms. Furthermore, using common proxies for financial constraints, we show that ex-ante financially constrained firms cut their investment more than unconstrained firms following an uncertainty shock. We then build a general equilibrium heterogeneous firms model with real and financial frictions. We show that adding financial frictions: i) amplifies uncertainty shocks by doubling their impact on output; ii) increases persistence by extending the duration of the drop by a half; and iii) propagates uncertainty shocks by spreading their impact onto financial variables. These results highlight why in periods of greater financial frictions uncertainty can be particularly damaging.

*Prize for Best Paper at The Fourteenth Conference on Asia-Pacific Financial Markets (CAFM) Seoul, Korea, December 6~7, 2019 (US$2,000)

*Semifinalist for Best Paper Award in Corporate Finance at the 2021 Financial Management Association Annual Meeting

Abstract: We map rich micro-data from financial accounts of US households to employers listed in the US stock market. Using banking and credit card transaction data, we test whether households adjust their spending in response to labour-income uncertainty, as proxied by employer-specific option-implied volatility. A 10 percent change in firm uncertainty leads households to change their average monthly spending over the next 6-months by -0.95 percent. This negative second-moment firm uncertainty effect is larger than the positive first-moment effect of firm stock returns. The employer-specific effect is robust to both industry- and aggregate-level volatility effects. The intensity of the spending response increases in the forecast horizon window, up to nine months. The spending response is more pronounced for low- and middle-income households, and for households that work at firms that recently had low employee growth, high CAPM Beta, and low Tobin's Q. Additionally, household spending shows an asymmetric response to `good' and `bad' uncertainty.

  • Production-Based Exchange Rates (new version coming soon)

Abstract: The paper starts by documenting a novel empirical fact, foreign currencies appreciate in the future (with respect to the U.S. dollar) upon larger capital investment rates of foreign subsidiaries of U.S. firms. I examine the link between exchange rates and the real economy in an investment-based asset pricing model. In the model, real investment adjustment costs abroad and at home are key determinants of investment return differentials. Higher foreign affiliate investment rates capture higher underlying investment opportunities abroad, and in turn higher Tobin's Q-differentials between the foreign affiliate and the U.S. headquarter. Going forward, the foreign currency appreciates against the U.S. dollar to offset the higher marginal benefits of production abroad relative to at home. I explore the testable implications of the model in a structural estimation framework using Generalized Method of Moments (GMM). The model does well in accounting for mean excess returns to currency portfolios.

Abstract: Recent models with Kreps-Porteus [1978] recursive preferences highlight the role of long-run mean risk in accounting for many stylized facts in international finance and international macroeconomics. These recursive preferences are a special case of the generalized disappointment-aversion preferences (GDA) recently introduced by Routledge and Zin [2010]. I examine GDA preferences in a setting that exhibits both country-specific and global economic uncertainty in a fully specified production economy. By nature of the GDA preferences, economic uncertainty plays a more important role than long-run mean risk and is the main source behind time-variation in the probability of disappointing economic outcomes. This time-varying probability drives productivities, risk-sharing arrangements between representative agents, and exchange rate movements. The model highlights how domestic and international uncertainty is relevant for asset prices and cross-border flows. I present the model with two countries, two goods, and asymmetric investment frictions.

Work in Progress

    • Business Groups, Media Ownership, and Media Bias (with Isil Erel [Fisher OSU] and Serdar Dinc [Rutgers])

    • Multinational Firm-level Dynamics of Production and Exchange Rates

    • Exposure to Macroeconomic Fundamentals and Stock Returns

Presentations: Seminars & Conferences

  • NBER Corporate Finance Program Meeting Spring, 2021

  • Western Finance Association Annual Meeting, 2021

  • University of Cambridge, 2021

  • Oslo Macro Group Seminar, 2021

  • American Finance Association Annual Meeting, 2021

  • European Financial Association Annual Meeting, 2020

  • Oslo Macro Workshop, 2020

  • SFS Cavalcade North America, 2020

  • Centre for Economic Policy Research Conference on New Consumption Data, 2020

  • The Ohio State University 2020 Alumni Finance Conference, 2020

  • HEC Paris 2020 Spring Finance Conference, 2020

  • Midwest Finance Association Annual Meeting, Chicago, 2020

  • NFN Young Scholars Nordic Finance Workshop, Stockholm, 2019

  • Stanford Institute of Theoretical Economics, Stanford University, 2019

  • NBER Summer Institute, 2019

  • Workshop on Production-based Asset Pricing, BI Norwegian Business School, 2018

  • Adam Smith Workshop in Asset Pricing, LBS, London, 2018

  • Society for Nonlinear Dynamics and Econometrics, Tokyo Japan, 2018

  • American Finance Association Annual Meeting, Philadelphia, 2018

  • European Finance Association Annual Meeting, Mannheim, 2017

  • Society for Economic Dynamics, Edinburgh, 2017

  • Midwest Finance Association, Chicago, 2017,

  • Workshop on Time Varying Uncertainty in Macro, University of St. Andrews, Scotland, 2017 Stanford Institute of Theoretical Economics, Stanford University, 2016

  • Macro Finance Society, University of Chicago, 2017

  • The Charles A. Dice Center Seminar, The Ohio State University, 2016

  • Stanford Institute of Theoretical Economics, Stanford University, 2015

  • The Charles A. Dice Center Corporate Finance Conference, The Ohio State University, 2015

Academic Discussions

  • Workshop on Production-based Asset Pricing, BI Norwegian Business School, 2021

  • Swedish House of Finance 9th National PhD Workshop in Finance, 2020

  • BI-SHoF Conference in Asset Pricing and Financial Econometrics

  • BI Norwegian Business School, 2019

  • Workshop on Production-based Asset Pricing, BI Norwegian Business School, 2019

  • Workshop on Production-based Asset Pricing, BI Norwegian Business School, 2018

  • European Finance Association Annual Meeting, Warsaw Poland, 2018

  • Workshop on Production-based Asset Pricing, BI Norwegian Business School, 2017

Grants, Honors, and Awards

  • Prize for Best Paper at The Fourteenth Conference on Asia-Pacific Financial Markets (CAFM) Seoul, Korea, December 6~7, 2019 (US$2,000)

  • Research Grant from the Provost for Research and Academic Resources, 2020

  • Macro Finance Society 8th Workshop, Sloan Foundation, Ph.D Student Travel Grant, 2016

  • Stanford Institute of Theoretical Economics, Travel Grant, 2016

  • Charles A. Dice Center, The Ohio State University, Seminar Travel Grant, 2016

  • Becker-Friedman Institute, University of Chicago, Travel Grant, 2015

  • American Finance Association, Doctoral Student Travel Grant, 2015

Non-Refereed Publications

    • "SMEs as Backbone of Economies: Opportunities, Constraints and Challenges". INCAE Business Review, Jan-April Edition, Vol. 1. No. 10, 2010 [with Anna Lucia Alfaro and Luis Noel Alfaro Gramajo]

    • "The Case of BANRURAL: A Development Bank". INCAE Business Review, Jan-April Edition, Vol. 1. No. 10, 2010 [with Anna Lucia Alfaro]

Teaching Experience

  • BI Norwegian Business School

      • Theory of Financial Markets (Masters of Finance Program), Fall 2017 & 2018, BI Norwegian Business School

      • Strategic Asset Allocation (Masters of Finance Program), Fall 2019, BI Norwegian Business School

      • Financial Modeling in Practice (Bachelors in Business and Finance), Spring 2021, BI Norwegian Business School

    • The Ohio State University, Undergraduate

        • Investment I, Spring 2015, Department of Finance, The Ohio State University

        • Problems and Policies in World Population, Food, and Environment, Summer 2012, Department of International Studies and AEDE, The Ohio State University