• Debt without Investment (Job Market Paper)

Best PhD Paper Award at BEC 2025

Abstract: This paper studies the link between the expansion of corporate debt, weak investment, and rising  market power in the United States. I show that the corporate debt boom is driven by a small subset of large firms issuing capital markets debt, primarily used for acquisitions rather than investments. I find a strong positive relationship between access to this financing and both acquisitions and market power. For identification, I construct a measure of debt supply based on persistent lender-borrower relationships in the syndicated loan market: one standard deviation increase in debt leads to a 137% increase in acquisition expenditure, and an increase in market share and profits by 1% and 42%, respectively. To assess the aggregate consequences of the expansion of debt capital markets for output and productivity, I develop an oligopolistic competition model that shows that acquisitions generate output losses in most of the cases, since the cost of higher market concentration often outweighs efficiency gains from acquisitions. 

Work in Progress

• From Financial to Real Concentration: The Role of Capital Markets, with Juan J. Cortina and Sergio Schmukler

Abstract: This paper examines the link between financial concentration in capital markets and real concentration in product markets. Despite the strong expansion of debt capital markets over the last decades, an increasing share of financing has been captured by a small set of top firms. This increase in financial concentration appears to be linked with real concentration and market power, both at the industry- and country-level. We argue that financial concentration is a key driver of real concentration: the uneven access to capital markets provides a competitive advantage to large firms, allowing them to fund market-consolidating and large-scale activities that smaller, credit-constrained competitors cannot, thereby deepening these disparities over time. This expanding dominance, in turn, further deepens their financial advantage over smaller, disadvantaged competitors, creating a feedback loop that raises both financial and real concentration. For identification, we construct a supply-side concentration measure of debt capital markets, finding that greater financial concentration leads to higher industry concentration. Finally, we also develop a Melitz-style model in which only the largest firms access capital markets, amplifying scale advantages and generating a financial-to-real concentration channel. The model highlights an important trade-off between increased efficiency from reallocating capital towards more productive firms, but rising cost associated with industry concentration.  

• Debt-Fueled Acquisitions and the Saving Glut of the Rich 

Abstract: This paper examines how the boom in corporate debt is linked to the saving glut of the rich, against the backdrop of weak private investment and rising market power in the United States. It develops a general equilibrium model of oligopolistic competition with acquisitions, endogenous credit supply, and heterogeneous households. The model highlights how demand- and supply-side forces jointly drive the secular decline in real interest rates and the expansion of corporate leverage. When dominant firms use debt to finance acquisitions, higher markups raise the incomes and savings of wealthy households—the main owners of these firms—expanding the pool of funds available in debt markets and reinforcing the borrowing-and-acquisition cycle. The framework endogenizes interest rates and credit supply, clarifying the two-way feedback between households and firms. It also traces how takeover proceeds are recycled—whether consumed, saved, or reinvested—showing how these portfolio and entry decisions shape borrowing costs, credit supply, market structure, and welfare.

Policy Notes and Non-Referee Publications

• Jay Gatsby’s American Dream: between inequality and social mobility

CaixaBank Research Informe Mensual 421, p.34-35, 2018

• Digital money in the economy of the future: new possibilities, new challenges

CaixaBank Research Informe Mensual 423, p.37-39, 2018

• China: in prosperity and in adversity

CaixaBank Research Informe Mensual 424, p.15-16, 2018

• How does being a dollarized economy affect a country in times of crisis? Evidence from Ecuador

Universitat Pompeu Fabra e-Repositori, 2017

Teaching