Welcome to my personal website!
I am a Ph.D. Candidate in the Department of Economics at Tilburg University.
My research covers topics in the fields of Macroeconomics and Environmental Economics with a special focus on fiscal policy and optimal taxation.
Upcoming and recent conferences and workshops
First PEGASOS Workshop, the Potsdam Institute for Climate Impact Research (PIK), Germany (scheduled)
XXVII Meeting on Public Economics, Institut d'Economia de Barcelona, University of Barcelona, Spain (scheduled)
European Winter Meeting of the Econometric Society, Erasmus School of Economics, Rotterdam, the Netherlands
CREE 9th Research Workshop 2019, Statistics Norway, Oslo, Norway
JOB MARKET PAPER
Optimal climate policies price externalities due to carbon emissions through Pigouvian taxes (the social costs of carbon), but these must be adjusted when there are other intertemporal distortions in the economy i.e., capital income taxes. I develop a climate--economy model to study the joint design of optimal climate and fiscal policies in economies with heterogeneous agents. Household heterogeneity comes from a life-cycle structure so that young and old people behave differently, and idiosyncratic productivity shocks in old age. I demonstrate how capital taxation, if optimal, drives a wedge between the market costs of carbon (the net present value of marginal damages using the market interest rate) and the Pigouvian tax (the net present value of marginal damages using the consumption discount rate of successive overlapping generations). In the optimum, the capital income tax is positive, the carbon price equals the market costs of carbon but it falls short of the Pigouvian tax when (i) preferences are not separable over consumption and leisure; (ii) labor income taxes cannot be age-dependent; or (iii) there is uninsurable labor income risk. In a numerical exercise, I find that idiosyncratic risk leads to an optimal capital income tax rate of 48% and a carbon price 11% lower than its Pigouvian level in the first best.
Resource-Richness and Economic Growth in Contemporary U.S. (with Reyer Gerlagh) [Revise & Resubmit, Energy Economics]
Between 1997 and 2014, US corn, soybean, and cotton production almost fully converted to genetically modified crops. Starting around 2007, improved tight oil and shale gas technologies turned the declining US fossil fuel production into a booming industry. We study the effects of these two resource technology revolutions on US state income. We find that the shale revolution increased income in states abundant in oil and gas resources. States dependent on agricultural production also saw an increase in income, which we, however, attribute not to the GM innovation, but to a demand increase brought by the Energy Policy Act of 2005. We also document the resource boom indirect effects on other growth-enhancing activities, particularly, on private and public education expenditures, and distortionary taxation.
Between 1950 and 2019, world life expectancy increased from below-50 to above-70, while fertility dropped from 5 to 2.5. We develop and calibrate an analytic climate-economy model with overlapping generations to study the effect of demographic change on capital markets and efficient climate policies. Our quantitative results show that demography matters. Accounting for demographic change raises the estimated social cost of carbon, at 2020, from 26 euro/tCO2 in a model that abstracts from demography, to 82 euro/tCO2 in our calibrated model. The findings also speak to a long-standing discussion how discount rates used for the evaluation of future climate damages are based on historic returns on capital.
Recent research suggests that intergovernmental grants, own-source revenues, and changes in government investment play an important role in helping local governments in advanced economies to adjust their fiscal positions in response to budget shocks. At the same time, little is known about the dynamic of fiscal adjustments at the local level in emerging economies, and there are reasons to expect distinct fiscal stabilization patterns, for instance, due to weaker institutional arrangements and lower fiscal capacity. However, using a panel data set of more than 900 municipalities in Colombia over the period 1985-2015, I find that in line with the results for developed countries (i) intergovernmental grants react significantly to increases in government spending; (ii) the response of own-source revenues to innovations in government spending in large cities is higher than in the small ones; (iii) government investment is highly volatile and responds remarkably to innovations in all other budgetary components; and (iv) there is no strong empirical evidence of a reduction in fiscal effort as a result of increases in intergovernmental grants.
The Dynamic Effects of Environmental and Fiscal Policy Shocks [Preliminary draft]
Carbon taxes and cap-and-trade schemes are the two most commonly used environmental instruments for dealing with climate change. While their implementation generates additional government revenues, they can also have indirect fiscal impacts by shrinking other tax bases. Using a DSGE model for the economy and the environment, this paper studies how the presence of nominal rigidities affects the general equilibrium effects of environmental and fiscal policy in an economy that faces uncertainty coming from demand and supply shocks. For instance, I find that an abatement cost shock leads to a decline in both output and consumption regardless the type of climate regulation in place. Nonetheless, it turns out that these negative responses are attenuated when environmental policy revenues are used to diminish either consumption or labor income taxes instead of rebating them via lump-sum transfers. On the other hand, I also find that the positive effects of a government spending shock on output are maximized when both prices and wages are rigid, there is a carbon tax scheme instead of a cap-and-trade system, and the expansion in public expenditures is financed through lump-sum taxation.
WORK IN PROGRESS
- Optimal development policies for resource-rich economies (with Frederick van der Ploeg)
- Optimal policies in an aging society
Tilburg University, The Netherlands
Teaching Assistant, Department of Economics,
Intermediate Macroeconomics: Dynamic Models and Policy, Undergraduate. Fall 2019
Economics for Social and Behavioral Sciences, Undergraduate. Spring 2019
Seminar Generational Economics, Graduate. Fall 2018
Macroeconomics III, Graduate. Spring 2018
Environmental Economics, Undergraduate. Spring 2018, Spring 2019, Spring 2020
Second Reader and Supervision for Bachelor and Master Thesis in Economics. Fall 2017, Spring 2018, Spring 2019, Fall 2019
Universidad de Los Andes, Bogotá, Colombia
Teaching Assistant, Department of Economics
Microeconomics III, Undergraduate. Spring 2013, Fall 2013, Spring 2014
Teaching Assistant, School of Government, Universidad de Los Andes, Bogotá, Colombia
Microeconomics for Public Affairs, Graduate. Spring 2013, Fall 2013, Spring 2014
Address: Department of Economics & Fiscal Institute Tilburg
CentER, Tilburg University
Room K 339 & M 826
P.O. Box 90153
5000 LE Tilburg
Email: R.V.JaimesBonilla [at] uvt [dot] nl