Developing the Mortgage Market: Technology, Property Rights, and Banking, with A. D'Andrea, P. Hitayezu, R. Kpodar and N. Limodio, March 2026, invited submission to the Review of Financial Studies (an earlier version circulated as Mobile Internet, Collateral, and Banking, IMF working paper n. 24/70)
Combining administrative data on credit, mortgages, and construction in Rwanda, this paper shows that technology helps overcome imperfections in property rights and foster the development of the mortgage market. Exploiting quasi-experimental variation in 3G internet coverage and a land title reform, we find that mobile connectivity shifts borrowers from microfinance to banks and expands mortgage lending and collateralized loans between 20 to 60 percent. 3G internet facilitated the distribution of land titles and enabled banks to use a digital mortgage registry to verify land titles in real time, lowering collateral verification frictions and increasing access to bank loans, mortgages and real estate investment. A mediation analysis and structural estimation reveal that the property rights channel accounts for 30–37% of the effect of mobile internet on bank lending and 75–80\% of the effect on collateralized loans.The Remains of the Trade: The U.S.-China Trade War and its Aftermath, with P. Antras, February 2026.
We study how the U.S.--China trade conflict has reshaped global trade patterns and how these changes interact with the rise of geoeconomic rivalry. Using recent tariff policy changes and monthly international trade flow data, we document a large reallocation of imports and exports away from direct U.S.--China links and toward third--country economies. To interpret these third-country outcomes, we introduce a taxonomy that separates various exposure margins -- export competition, import exposure, sourcing opportunities, and rerouting potential -- and construct simple indices that map countries into these channels. We then show that geopolitical alignment has become increasingly predictive of bilateral trade outcomes, and we develop a framework in which geopolitical influence alters unilateral tariff incentives and the sustainability of cooperative trade policy. The results help explain recent mounting strains on the rules-based trading system.Shifting Influence? China and the 2025 U.S. Aid Retrenchment, with A. Fuchs, V. Lang and J. Rosenbusch (draft coming soon)
The sudden suspension of most U.S. foreign aid in January 2025 created a large, unanticipated shock to the global aid system. We examine whether China expanded its aid to countries most exposed to the U.S. retrenchment. While the prevailing view predicts a strategic Chinese response to fill the gap, reduced competition may also weaken incentives to deploy aid geopolitically. Using high-frequency data on Chinese aid exports and a difference-in-differences design based on pre-freeze exposure to U.S. assistance, we find no evidence that China increased aid to more affected countries. These results suggest that when geopolitical competition weakens, incentives to expand aid may also decline, helping explain the absence of a short-run responseBank Financing of Global Supply Chains, with L. Alfaro, M. Brussevich and C. Minoiu, CEPR Discussion Paper n. 20164, April 2025 (new draft coming soon)
How do firms overcome frictions when trade policy shocks disrupt supply chains? Linking shipment records to the U.S. credit register, we analyze how banks mitigated financial and information frictions facing firms who searched for suppliers after the 2018--2019 tariffs. Tariff-hit importers drew more on credit lines and took out loans at higher rates. Firms connected to specialized banks secured credit on better terms and replaced suppliers up to ten months faster than similar firms with other banks. Our results highlight a new information channel through which specialized banks mitigate frictions and dampen policy shock transmission to the real economy.Who Pays for Your Rewards? Redistribution in the Credit Card Market, with S. Agarwal, A. F. Silva and C. Wix, CEPR Discussion Paper n. 17733, December 2023 (new draft coming soon)
We study credit card rewards as an ideal laboratory to quantify redistribution between consumers in retail financial markets. Comparing cards with and without rewards, we find that, regardless of income, sophisticated individuals profit from reward credit cards at the expense of naive consumers. To probe the underlying mechanisms, we exploit bank-initiated account limit increases at the card level and show that reward cards induce more spending, leaving naive consumers with higher unpaid balances. Naive consumers also follow a sub-optimal balance-matching heuristic when repaying their credit cards, incurring higher costs. Banks incentivize the use of reward cards by offering lower interest rates than on comparable cards without rewards. We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing disparities.Emerging Market Resilience: Good Luck or Good Policies?, with M. Bolhuis, F. Grigoli, M. Kolasa, R. Meeks and Z. Zhang, CEPR Press Discussion Paper No. 20857, November 2025.
Emerging markets have shown remarkable resilience during risk-off episodes in recent years. While favorable external conditions---good luck---contributed to this resilience, improvements in policy frameworks---good policies---played a critical role in bolstering the capacity of emerging markets to withstand the consequences of these events. Improvements in monetary policy implementation and credibility have reduced reliance on foreign exchange (FX) interventions and capital flow management measures, and stricter macroprudential regulation also contributed to less FX interventions. Also, central banks have become less sensitive to fiscal interference and hold sway over domestic borrowing conditions. Looking ahead, countries with robust frameworks face easier policy trade-offs and are better positioned to navigate risk-off episodes. In contrast, economies with weaker frameworks risk de-anchoring inflation expectations and larger output losses if monetary tightening is delayed, especially when persistent price pressures emerge. In these settings, FX interventions offer only temporary relief and are less necessary when policy frameworks are sound.The Cost of Waiting, with J. Gamboa-Arbelaez and M. Moreno Badia, December 2025 (draft coming soon)
While the macroeconomic effects of sovereign defaults are well documented, much less is known about the broader consequences of fiscal crises---which often occur without default and are more frequent in emerging markets and developing economies. Using data for 120 countries since 1980, we examine the economic and social consequences of fiscal distress. We find that the most pronounced effects arise in protracted crises, which feature persistent cuts in public spending---particularly in education, healthcare, and social protection---alongside declines in calorie intake and rising poverty. Back-of-the-envelope estimates suggest that recent crises of this type could leave 33.7 million children out of school and 85.8 million people without basic healthcare. These effects are associated with weaker growth, rising debt, and higher debt service costs that compress fiscal space.International trade spillovers from domestic COVID-19 lockdowns, with S. Aiyar, D. Malacrino and A. Mohommad, CEPR Discussion Paper n. 17395, revision requested, Canadian Journal of Economics
While standard demand factors perform well in predicting historical trade patterns, they fail conspicuously in 2020, when pandemic-specific factors played a key role above and beyond demand. Prediction errors from a multilateral import demand model in 2020 vary systematically with the health preparedness of trade partners, suggesting that pandemic-response policies have international spillovers. Bilateral product-level data covering about 95 percent of global goods trade reveals sizable negative international spillovers to trade from supply disruptions due to domestic lockdowns. These international spillovers accounted for up to 60 percent of the observed decline in trade in the early phase of the pandemic, but their effect was short-lived, concentrated among goods produced in key global value chains, and mitigated by the availability of remote working and the size of the fiscal response to the pandemic.Public debt and r-g at risk, with U. Wiriadinata, (also as IMF working paper n. 20/137), January 2022, revision requested, Oxford Open Economics
As interest rate-growth differentials (r-g) turned negative in many countries, governments consider pursuing fiscal expansion and the potential risks involved. Using a large sample of advanced and emerging economies, our analysis suggests that high public debts can lead to adverse future r-g dynamics. Specifically, countries with higher initial public debt experience (i) a shorter duration of negative r-g episodes and a higher probability of reversal, (ii) higher average r-g, and (iii) a more right-skewed r-g distribution, that implies higher down-side risks. Furthermore, high-debt countries experience larger increases in interest rates in response to (iv) an unexpected decline in domestic output and (v) an increase of global volatility. Results are stronger when public debts are denominated in foreign currencies.Germany’s Foreign Direct Investment in Times of Geopolitical Fragmentation, with K. Fletcher, V. Grimm, T. Kroeger, A. Mineshima, C. Ochsner, P. Schmidt-Engelbertz and J. Zhou, IMF working paper n. 2024/130
Global geopolitical tensions have risen in recent years, and European energy prices have been volatile following Russia’s invasion of Ukraine. Some analysts have suggested that these shifting conditions may significantly affect FDI both to and from Germany. To shed light on this issue and other factors affecting German FDI, we leverage two detailed and complementary FDI datasets to explore recent trends in German FDI and how it is affected by geopolitical tensions and energy prices. In doing so, we also develop a new measure of geopolitical alignment. Our main findings include the following: (i) the post-pandemic recovery in Germany’s inward and outward FDI has been weaker than in the US or the rest of the European Union (EU27) as a whole; (ii) Germany’s outward FDI linkages with geopolitically distant countries have been weakening since the Global Financial Crisis; (iii) the relationship between Germany’s outward FDI and geopolitical distance has become more pronounced over the last six years; (iv) Germany’s outward FDI to China-Russia bloc countries is more sensitive to recent geopolitical developments compared with that to US-bloc countries; and (v) Germany’s outward FDI in energy-intensive sectors decreases as destination countries’ energy costs increase, but energy costs do not appear to have a statistically significant effect on outward FDI in non-energy intensive sectors.Bank Technology Adoption and Productivity, with A. Rebucci and G. Zhang, January 2024
We build and estimate a model of growth and finance in which banks adopt technology embedded in capital goods produced by entrepreneurs, and agents choose whether to be workers or capital goods-producing entrepreneurs. In this setting, aggregate firm productivity affects bank efficiency and vice versa. We find that closing down the adoption of banking technology reduces aggregate productivity growth by 16.7 percent. Empirical evidence based on US Call Report Data is consistent with the bank technology adoption mechanism at the core of the model.When They Go Low, We Go High? Measuring Bank Market Power in a Low-for-Long Environment, with D. Igan, M.S. Martinez Peria and N. Pierri, IMF working paper n. 2021/149
We examine trends in bank competition since the early 2000s. The Lerner index—arguably the most commonly used measure—shows evidence of a marked increase in market power in advanced economies, especially after the global financial crisis. But other frequently used indicators of banking sector competition seem much more muted. We show that the significant drop in policy rates that occurred in the aftermath of the crisis could explain the seeming disconnect. Adjusting the Lerner index for the impact of policy rates reveals that market power has been fairly constant in advanced economies—consistent with the other signals and similar to the pattern observed in emerging markets.Tracking the Economic Impact of COVID-19 and Mitigation Policies in Europe and the United States, with S. Chen, D. Igan and N. Pierri, Covid Economics, 36, July 2020
We use high-frequency indicators to analyze the economic impact of COVID-19 in Europe and the United States during the early phase of the pandemic. We document that European countries and U.S. states that experienced larger outbreaks also suffered larger economic losses. We also find that the heterogeneous impact of COVID-19 is mostly captured by observed changes in people’s mobility, while, so far, there is no robust evidence supporting additional impact from the adoption of non-pharmaceutical interventions. The deterioration of economic conditions preceded the introduction of these policies and a gradual recovery also started before formal reopening, highlighting the importance of voluntary social distancing, communication, and trust-building measures.Assessing Bias and Accuracy in the World Bank-IMF's Debt Sustainability Framework for Low-Income Countries, IMF working paper no. 14/48 with A. Berg, E. Berkes, C. Pattillo and Y. Yakhshilikov, March 2014, revision requested, World Bank Economic Review.
The World Bank and the IMF have adopted a debt sustainability framework (DSF) to evaluate the risk of debt distress in Low Income Countries (LICs). At the core of the DSF are empirically-based thresholds for each of five different measures of the debt burden (the “debt threshold approach” DTA). The DSF contains a rule for aggregating the information contained in these five different variables which we label the “worst-case aggregator” (WCA) in view of the fact that the DSF considers a breach of any one of the thresholds sufficient to indicate a high risk of debt distress. However, neither the DTA nor the WCA has heretofore been subject to empirical testing. We find that: (1) the DTA loses information relative to a simple proposed alternative; (2) the WCA is too conservative (predicting crises too often) in terms of the loss function used in the DSF; and (3) the WCA is less accurate than some simple proposed alternative aggregators as a predictor of debt distress.Aid and Vulnerability, MoFiR working paper n° 88.
Managing and identifying risks are a key challenge for Low Income Countries (LICs), which are extremely vulnerable to exogenous shocks. However, the use of risk management tools by developing countries is quite limited. The paper discusses in which ways aid could strengthen the capacity of LICs to deal with vulnerability to external shocks and to manage capital flows. We provide some novel empirical evidence on the potential role of aid as output stabilizer and shock absorber in recipient countries, and on aid unpredictability.Vulnerability, debt and growth in the Caribbean: A Fan Chart Approach, IDB Technical Note n° 577, with L. Andrian, V. Mercer-Blackman and A. Rebucci.
High government debts, weak economic growth, vulnerability to external shocks and the design of sound fiscal consolidation strategies are among the most critical issues that some of the Caribbean countries has currently to deal with. Stabilization programs may harm economic growth but, under certain conditions, they could be expansionary. The main result of this analysis is that the uncertainty about the future evolution of debt increases when the volatility of exogenous shocks affecting fiscal revenues are properly accounted for into the debt sustainability analysis.Debt Sustainability Framework in HIPCs: A Critical Assessment and Suggested Improvements, revised May 2008, with M. Arnone and L. Bandiera (an earlier version, External Debt Sustainability: Theory and Empirical Evidence appeared as Catholic University of Piacenza Working Paper n° 33)
This paper presents an assessment of the external debt literature related to the IMF-World Bank HIPC Initiative and proposes to extend the present debt sustainability framework. We argue that a comprehensive debt sustainability analysis requires a fully-fledged government budget constraint, which includes not only the external position, but also public domestic debt and the feedback effects of the choices on deficit financing. We also suggest considering uncertainty and the risk of default, to carefully evaluate the resource required to finance poverty reduction policies, and to develop a legal framework to deal with private creditors. As a result, debt relief should be tailored on specific country needs and it should be part of a more comprehensive development policy, aimed at reducing poverty, built on the fully-fledged government budget constraint and designed for providing a permanent exit from debt dependence and an incentive to strengthen institutions and policies.Spillovers from Emerging Markets: Firm-Level Evidence (with P. Beltran and L. Franz)
Democracy and Its Unequal Effect on the Benefits and Costs of Capital Inflows (with M. Eberhardt and H. Lim)