The Role of IMF in the Fight Against COVID-19: The IMF COVID RESPONSE INDEX (with Kevin P. Gallagher)
COVID Economics: Vetted and Real-Time Papers, Issue 42, 19 August 2020, CEPR Press
This paper establishes a methodology that can be used to measure the behavior of International Monetary Fund (IMF) program design and eventually the outcomes of IMF programs in response to the COVID-19 crisis. We create an IMF COVID RECOVERY INDEX by coding IMF programs based on the extent to which they recommend or condition that borrowing countries increase efforts to combat the virus, protect the vulnerable, and stage a green recovery in accordance with direction from IMF leadership and fiscal guidance notes generated by the IMF Fiscal Affairs Department. Relative to earlier research that suggests the IMF falls short in making such policies part of recovery efforts during times past, our preliminary research indicates that the IMF is indeed prioritizing health and social spending during this crisis—albeit more so in programs where it has little leverage over the implementation of such recommendations. However, IMF support for greening the recovery does not match the rhetoric from IMF leadership or from fiscal guidance notes issued by the IMF Fiscal Affairs department at this time. The IMF COVID RECOVERY INDEX will be updated in real time on the internet, and eventually be used in econometric exercises that examine the extent to which IMF support for confronting the virus, protecting the vulnerable, and mounting a green recovery is associated with those desired outcomes.
[Data] [Brookings Op-Ed, BU GDP Center Blog, BU GDP Center Webinar]
No Sugar Coating: Quantifying the Welfare Losses from the US-Cuba Trade Policy (with Stefania Garetto and Marie Petkus), May 2026.
What are the consequences of comparative advantage-driven specialization for developing countries navigating socio-economic transitions? We address this question by studying the Cuban economy in the first half of the twentieth century through the lens of a quantitative Ricardian model of trade. Using newly digitized historical trade data, we recover Cuba’s revealed comparative advantage before and after the imposition of large trade barriers on its main product, sugar. We perform a counterfactual analysis to provide a quantitative answer to a long-standing question about the Cuban economy: the ’road not taken’. What would the Cuban economy have looked like in later years if its economic integration had remained the same as at the beginning of the twentieth century? The answer to this question sheds light on our understanding of the consequences of extreme specialization for developing countries in situations of political instability.
This project analyzes the effects of trade policy uncertainty (TPU) on the different channels of exporters’ dynamics. Using Peruvian exporters’ data, I examine the impact of TPU resolution through the implementation of the free-trade agreement (FTA) between Peru and the US. I find that TPU resolution increases not only the entry of exporters, but also drives a decline in the exit rates of incumbent exporters. The export survival channel is important in determining the effect of TPU resolution on the growth of export sales and the quantity exported. Based on these facts, I augment the framework of export dynamics under TPU in Handley (2014) and Carballo et al. (2022), introducing endogenous exit and firms’ expectations about a trade policy change that depend on previous exporting experience. The model demonstrates how TPU raises both the entry and continuation productivity thresholds relative to the deterministic case, in line with the empirical results.
Climate Change and IMF Debt Sustainability: Adapting the IMF Toolkit for Colombia and Peru (with Kevin P. Gallagher and Ana Maria Trujillo), July 2023.
The International Monetary Fund (IMF) has recently moved to expand its mandate to the macro-critical aspects of climate change and climate change policy across its surveillance, advice, and financing activities. In terms of surveillance, one of the most important roles the IMF will need to play is to ensure that member states are able to respond to climate shocks and mobilize the necessary resources to transform their economies toward low carbon and resilient growth paths in a fiscally sound and financially stable manner. A key tool to address this is the IMF's Debt Sustainability Analysis (DSA) and the related Debt Dynamics Tool (DDT). In this paper, we adjust the IMF's DDT methodology to integrate climate risk and climate transition resources needs in an application to Colombia and Peru. Our examination of these two contexts reveals that climate-related risks may significantly impact a nation's public debt trajectory, leading to substantial escalation and even raising the likelihood of encountering severe stress events. Crucially, our analysis underscores the necessity for new methodological approaches and data collection mechanisms at the Fund to formally incorporate climate change considerations into the DSA or the DDT. By doing so, the IMF would be empowered to provide more precise advice and engage in more fruitful conversations with its member nations.
Climate Vulnerability and Balance of Payments Problems in Developing Countries (with Kevin P. Gallagher), April 2023.
As a country's climate vulnerability increases, it is more likely to seek balance of payments support from the International Monetary Fund (IMF). This finding adds to the growing body of research on the macro-critical aspects of climate change and climate change policy, accentuating the urgency of climate action and a more significant role for the IMF as climate vulnerability permeates the world economy in the future.
The IMF and Climate Change: Tracking the IMF's Leadership and Engagement to Climate Change, (with Luma Ramos, Kevin P. Gallagher, and William Nicholas Kring), April 2022.
What led the International Monetary Fund (IMF) to create and implement a climate change strategy after overlooking it for many years? Under the leadership of Managing Director (MD) Kristalina Georgieva, the IMF began to mainstream climate change across the institution. This paper evaluates the extent to which Georgieva’s words translate into IMF policies and practices by bridging the literature on institutional policy change and textual analysis. This study assesses recent surveillance guideline reviews and applies textual analysis to IMF Official speeches, Article IV Country Reports and Disbursements Staff Reports between the third quarter of 2017 and the first quarter of 2021. While the Managing Director’s rhetoric opened the space for policy change, the substantive policy change was elusive when the Executive head’s operational and policy positions were not aligned with key principals of the IMF. In contrast, when the position of the MD is aligned with key member state interests, more radical shifts in Fund practices and policies are likely. We layer existing theoretical approaches to institutional change at the IMF to assess the impacts of Georgieva’s rhetoric on IMF policies and practices
Climate Change and the IMF Debt Sustainability Analysis, with Kevin P. Gallagher, April 2022.
The International Monetary Fund (IMF) has pledged to align the IMF’s surveillance, advice and financing to the goals of the Paris Climate Agreement. One area of crucial importance will be reforming the IMF’s ‘Debt Sustainability Analysis’ to incorporate climate change. In this short note, we adjust the IMF Debt Sustainability Analysis methodology to incorporate climate risk and climate transition resource needs in an application to the economies of Colombia and Peru. In these two test cases, we observe that the climate shocks may significantly affect the countries’ public debt trajectory, making countries’ debt converge to a significantly higher level and, in some cases, increasing the countries’ probability to incur a significant stress event. More importantly, however, our analysis points to the need for new methological approaches and new forms of data collection at the IMF so that more robust analyses can be conducted in order to fully incorporate climate change into Debt Sustainability Analysis and the subsequent advice the IMF gives to member states.
Climate Vulnerability and Shocks, and the International Monetary Fund Support, with Kevin P. Gallagher
Trade Policy Uncertainty and Supply Chain Changes, with Vikram Dixit and Juan Ignacio Jacoubian
Trade Policy Uncertainty and Trade Relationships