Research

Work in progress

  • "Financial search and matching in a two-country setup"
  • "Markup Cyclicality and Firm Dynamics", with Kristine Koponen and Casper de Vries
  • "Noisy Disasters", with Antti Ripatti
  • "A Search Model of Bank Default"


Peer-reviewed publications


Previous WP versions: CEPII working papers 2018-19, here; Bank of Finland Research Discussion Papers, 2017-34, here; CEPREMAP Working Papers 1707, here

Blog mention: NEP-DGE selection post, December 2017

Abstract: We develop a business cycle model where endogenous firm creation stems from two credit market frictions. First, entrepreneurs search for a lending relationship with a bank. Second, an optimal debt contract with monitoring is implemented. We analyze the interplay between both frictions, and embed it into an otherwise standard business cycle model which we estimate with Bayesian techniques. We find that uncertainty shocks are a prime contributor to business cycle fluctuations in the US, not only for macro-financial aggregates but also for firm creation. Moreover, we point out that the credit search friction dampens the financial accelerator mechanism because default may imply the end of the lending relationship.


Abstract: In RBC models, “disaster risk shocks” reproduce countercyclical risk premia but generate an increase in consumption along the recession and asset price fall, through their effects on agents’ preferences (Gourio, 2012). This paper offers a solution to this puzzle by developing a New Keynesian model with such a small but time-varying probability of “disaster”. We show that price stickiness, combined with an elasticity of intertemporal substitution smaller than unity, restores procyclical consumption and wages, while preserving countercyclical risk premia, in response to disaster risk shocks. The mechanism then provides a rationale for discount factor first- and second-moment (“uncertainty”) shocks.


Abstract: This paper studies the theoretical effects of changes in disaster risk on macroeconomic variables, in five Latin American economies. It compares country-specific variants of the New Keynesian DSGE model with disaster risk developed by Isoré and Szczerbowicz (2017). Countries with higher price flexibility, such as Argentina, Brazil, and Mexico, are found to be relatively less vulnerable to disaster risk shocks, as compared to Chile and Colombia in particular. Overall, the analysis suggests that increases in the probability of natural disasters over time may have significant macroeconomic effects, beyond the direct impact of actual disaster occurrences themselves.

Other working papers

  • "International Propagation of Financial Shocks in a Search and Matching Environment"

Bank of Finland Research Discussion Papers: here

Abstract: This paper develops a two-country multi-frictional model in which financial contagion arises despite a flexible exchange rate regime and substitutable financial assets, contrary to the open-economy literature results under these two conditions. The search and matching approach accounts for the time needed to restore normal functioning of financial markets following a disruption and allows dissociating two types of financial shocks: (i) pure liquidity contractions imply negative co-movements of home and foreign outputs, so that the model nests the standard results as a particular case; (ii) non-walrasian shocks to banks’ funding costs in one country do generate international financial contagion.


CEPII Working paper: download

Abstract: This paper incorporates a small and time-varying “disaster risk” à la Gourio (2012) in a New Keynesian model. A change in the probability of disaster may affect macroeconomic quantities and asset prices. In particular, a higher risk is sufficient to generate a recession without effective occurrence of the disaster. By accounting for monopolistic competition, price stickiness, and a Taylor-type rule, this paper provides a baseline framework of the dynamic interactions between the macroeconomic effects of rare events and nominal rigidity, particularly suitable for further analysis of monetary policy.

Policy papers

  • "Teacher Evaluation: Current Practices in OECD Countries and a Literature Review"

OECD Working paper: download

Other versions: Spanish working paper: download; Book version: link to Amazon

Abstract: This paper discusses the most relevant issues concerning teacher evaluation in primary and secondary education by reviewing the recent literature and analysing current practices within the OECD countries. First, it provides a conceptual framework highlighting key features of teacher evaluation schemes. In particular, it emphasises the importance of clarifying the purposes of teacher appraisal, whether summative when designed to assure that the practices enhancing student learning are undertaken or formative when conducted for further professional development objectives. It also encompasses the diverse criteria and instruments commonly used to assess teachers as well as the actors generally involved in the process and potential consequences for teachers’ professional life. Second, it deals with a number of contentious points, including the question of the use of student outcomes to measure teaching performance, the advantages and drawbacks of different approaches given the purpose emphasised and resource restrictions, the implementation difficulties resulting from different stakeholders’ interests and possible ways to overcome these obstacles. Finally, it provides an account of current empirical evidence, pointing out mixed results stemming from difficulties in assessing the effects of such evaluation schemes on teaching quality, teachers’ motivation and student learning. It concludes by considering the circumstances under which teacher evaluation systems seem to be more effective, fair and reliable. Developing a comprehensive approach to evaluate teachers is critical to make demands for educational best practice compatible with teachers’ appropriation of the process as well as to enhance the decisive attractiveness and recognition of the teaching profession.