Research

Journal articles

"The Macroeconomics of Age-Varying Epidemics" (with Andrea Papetti),  European Economic Review, 151, January 2023, 104346

 CEPR WP Covid Economics, Issue 58, 19 Nov. 2020 - VoxEu column  


We incorporate age-specific socio-economic interactions in a SIR macroeconomic model to study the role of demographic factors for the COVID-19 epidemic evolution, its macroeconomic outcomes and possible containment measures. Our framework captures the endogenous response of rational individuals who freely reduce consumption- and labor-related personal exposure to the virus, with interactions that can vary within and across ages, while fail to internalize the impact of their actions on others. In absence of intervention this amplifies the economic losses, but it also implies that individual behavioral response to the risk of infection is an important ally of the needed policy measures to contain the spread of the virus. We find that for any level of social distancing, the implied optimal economic shutdown generates small gains in terms of lives and large average output losses over one-year time that could be avoided, for given lives saved, with age-targeted social distancing. This result is confirmed by a version of the model calibrated to match real epidemic and economic data evolution in the first months of 2020.

Working papers

"Demographics and The Real Exchange Rate" (with Andrea Papetti) [Mar 2021]

We develop a two-country, two-sector overlapping generations model to examine the effect of population aging on the real exchange rate (RER). While an older population raises the relative demand for nontradables (a feature of structural transformation) putting upward pressure on relative prices thus appreciating the RER, it also implies a lower real interest rate (distinctive of secular stagnation) that dampens the elderly nontradables consumption and thus mitigates the RER appreciation. We quantify a general equilibrium effect of 0.1% RER appreciation following a rise by 1% in the relative old dependency ratio in line with our empirical estimates.

"The Distributional Implications of Fiscal Devaluations" [Feb 2020]

This paper explores the distributional implications of a fiscal devaluation acquired through a shift from labor to consumption taxes in an open-economy Heterogeneous Agents New Keynesian model with incomplete markets and uninsurable income risk. A permanent fiscal devaluation perfectly mimicking a nominal devaluation in aggregate implies an increase in transfers balanced by lower profits. This leaves the representative agent unaffected. However, as the higher transfers affect all agents symmetrically, while decreased profits impact agents according to their wealth, distributional effects arise. The implicit insurance provided by higher transfers benefits wealth-poor agents and mitigates the equity concerns associated with fiscal devaluations.

"Public Debt and Household Lending" (with Andrea Camilli) [Dec 2020]  

Duke's FinReg Blog - Global Financial Markets Center

What is the interaction between housing wealth concentration and domestic banks' exposure to sovereign debt? We build a general equilibrium model with housing, heterogeneous agents differing in investment opportunities, and banks optimizing lending between mortgages and sovereign securities subject to financial frictions. A moral suasion shock shifts banks' assets from mortgages to government bonds, lowering the borrowing cost of the government and increasing the one of households, thus crowding out private lending. The magnitude of this effect depends on how much deposits are available to banks after the shock, which is in turn affected by the distribution and concentration of real estate wealth. A smaller share of savers in the economy (inducing a higher concentration of real estate) channel more savings towards real estate than to deposits in response to a moral suasion shock. This amplifies the crowding out up to 2 percentage points and exacerbates the ex-ante income and wealth inequality. With a regulation imposing a constant and limited share of government bonds in banks’ balance sheets, the impact of moral suasion on private lending and wealth inequality is reversed. Our analysis highlights that real estate concentration is a relevant dimension for the general equilibrium impact of changes in banks’ exposure to sovereign debt.

Work in progress

"Wealth inequality and liquidity"  (with Andrea Camilli and David Domeij)  

"Housing distribution and the monetary policy transmission to exchange rates"

"Distributional consequences of sovereign debt default" (with Andrea Camilli, Silvia Marchesi and Lucas Mariani)