Published Papers

Growth, Housing, and  Global Imbalances, with Luisa Lambertini and Serhiy Stepanchuk, International Economic Review, 65(2), 623-654, 2024.

In the decade leading to the Great Recession, the United States experienced rising house prices and current account deficits, consistent with the negative correlation emphasized in the existing literature. On the other hand, China and other fast-growing Asian economies saw rising house prices accompanied by current account surpluses. We develop a two-country life-cycle model with housing where the two economies become financially integrated when one country is relatively scarce in capital and in transition to its autarky balanced growth. We allow for asymmetries across countries in terms of productivity growth, the loan-to-value ratio, the wage profile over the life-cycle, and the population structure. The model matches the observed relationship between the house prices and the current account in both economies. We find that modelling the life-cycle patterns of the wage income profile is the key to obtaining our results.

Financial Frictions and Firm Informality: A General Equilibrium Perspective, with Nathalie Pouokam and Francesco Turino, The Economic Journal, vol. 132, no 645, p. 1790-1823, 2022.

This paper assesses the extent to which financial development and informality are related, and how this relation translates into differences in GDP and TFP across countries. To this end, we develop a quantitative life-cycle general equilibrium model of occupational choice with imperfect tax enforcement in which informal entrepreneurs have no access to credit and face an endogenous probability of detection. Our quantitative analysis shows that the degree of financial frictions of a country is crucial in shaping the firm's incentives to evade taxation, a feature that, in the aggregate, results into a non-linear relationship between financial development and both size of informality and GDP per capita. We test these model's predictions with cross-country data and find supporting evidence in favour of both non-linearities. [Technical Appendix] [IMF Working Paper (August 2020)] [Slides] [Replication Package]

International Interest Rates, the Current Account and Housing Markets, Economic Modelling, Elsevier, vol. 75, pages 268-280, 2018.

Current account deficits and housing prices showed a strong positive correlation throughout the mid-90s to 2007. This paper studies the effect of a decrease in the international interest rate and in the downpayment requirement to buy a house on the joint behavior of the current account and housing prices. To this end, I build an open economy model with life-cycle heterogeneous agents, tradable goods and housing. I calibrate the model to the U.S. economy and compute the transition after a decrease in the interest rate and in the downpayment. The model is able to match the boom and (qualitatively) the cooling down in the housing market without a reversal in the interest rate, the increase in the homeownership rate, the simultaneous boom followed by a decline in non-housing consumption, and the emergence of a negative net foreign asset position.

Capital Goods, Measured TFP and Growth: The Case of Spain, with Antonia Díaz, European Economic Review, Elsevier, vol. 83 (C), pages 19-39, 2016.

The effect of investing in equipment and/or structures on TFP and long run growth is investigated here. We argue that economies can grow in spite of stagnant TFP if the investment rate is inefficiently high. We study the case of Spain where real GDP per worker grew at 2.74 percent annually and TFP was stagnant during 1996-2007. We show that low Spanish TFP is due to low ISTC and an inefficiently high investment in residential structures. We quantify the effect of the housing boom of the 2000s, the total cost of subsidies to residential structures in terms of TFP and income growth. [Working Paper Version (October 2014)] [Discussion in NeG (in Spanish)]

Work in Progress

Entrepreneurial Human Capital and Firm Informality, with Adilya Abdrazakova and Francesco Turino.

This paper studies how entrepreneurial human capital affects firm informality in developing economies. We develop a life-cycle general equilibrium model with endogenous education and occupational choice under limited tax enforcement and credit frictions. Entrepreneurial ability is enhanced by college education. Calibrated to Brazil, the model shows that expanding college attainment reduces informality by reallocating talent toward larger, more productive formal firms. This raises GDP and aggregate productivity, with the magnitude of effects depending on the degree of credit frictions. We validate the mechanism using microdata, leveraging Brazil’s 1996 education reform. The findings underscore the role of education in promoting formalization. [Technical Appendix]

Consumption Insurance, Earnings Risk and Illiquid Housing Wealth, with Claudio Campanale.

Households appear to smooth consumption in the face of income shocks much more than implied by the standard incomplete market model with one fully liquid asset and permanent plus temporary income shocks. However, it is well known that for most households, illiquid housing represents the most important form of wealth holdings. Moreover, the last decade has witnessed the development and estimation of richer models of earnings dynamics. In this paper, we extend the basic SIM model to include a second illiquid asset and a more complex earnings process based on recent empirical estimates. We show that under the assumed earnings process with lower persistence that increases with age, the insurance coefficient against persistent shocks increases by about 20 percentage points compared to the baseline permanent shocks model, overshooting its empirical counterpart in Blundell, Pistaferri and Preston (2008). The presence of illiquid housing reduces it by about 4 percentage points, aligning the model more closely to the data. We conclude that both housing and a richer specification of income risk are important for understanding insurance against shocks, with the latter playing a quantitatively more important role.

The Intangible Borrowing Constraint of Entrepreneurship, with Lian Allub, Axelle Ferriere, and Yu Zheng.

Other publications (in Spanish)

Amor, Familia y Economía: Una Aproximación Sistémica a la Economía de la Familia, Journal of the Spanish Federation of Family Therapy Associations (Mosaico), número 86, pág. 91-100, 2024. ISSN: 1887-0600.

Este artículo resume brevemente la literatura económica sobre la Economía de la Familia desde una perspectiva sistémica. En concreto, describe como el análisis económico estudia y explica, por un lado, cómo el entorno socioeconómico condiciona y da forma a la estructura de la familia, y, por otro, cómo estos cambios, cuando son generalizados, impactan en la economía a través de sus efectos en diversas variables socioeconómicas.