Working Papers
Public Debt, iMPCs & Fiscal Policy Transmission - 2024 - [ECB WP No 3106]
[ECB X Summary] [Suerf Page] [Suerf Policy Brief No 1300] [SSRN WP]
Presentations: Princeton Student Research Group (Princeton), Princeton Finance Research Group (Princeton), Nova SBE MacroGroup (Lisbon), 17th Annual Meeting of the Portuguese Economic Journal (Faro), European Central Bank - Workshop on Household Economics (Frankfurt Am Main) , European Central Bank - Workshop on Fiscal Policy (Frankfurt Am Main), Insper (São Paulo), FGV EESP (São Paulo), ECB Brownbag, Fourth PhD Workshop in Money and Finance (Stockholm), 14th PhD Student Conference on International Macroeconomics - Economix (Paris Nanterre), International Monetary Fund (Washington DC), 1st Lausanne PhD Macroeconomics Conference, 47 SBE Conference (Insper, São Paulo)
This paper investigates the relationship between public debt and the effectiveness of fiscal policy, presenting evidence of an inverse relationship between government debt and fiscal multipliers. To explain the results, I develop and calibrate a HANK model tailored to the U.S. economy. The model reveals that higher public debt diminishes fiscal multipliers by making households less constrained. Theoretically, I show intertemporal marginal propensities to consume (iMPCs) are sufficient statistics of public debt, influencing fiscal multipliers. Decomposing changes in iMPCs into components driven by wealth distribution and the policy function, I find that the primary factor driving variations in iMPCs is the change in interest rates due to the variation of government bonds. This highlights a novel mechanism: even in the absence of fiscal limits or crowding out, large stocks of debt can weaken fiscal stimulus through their effect on household behavior.
Selected Work - In - Progress
Production Networks and the Wealth Distribution - with Niccoló Battistini and Martin Spitzer
Slides and Draft Available upon request. Presentations: Nova SBE MacroGroup (Lisbon), European Central Bank Research Workshop (Frankfurt), Seventh WS2 ChaMP Workshop (Tallinn), 18th Annual Meeting of the Portuguese Economic Journal (Lisbon), European Economic Association (Bourdeaux)*.
*presented by coauthor
Unemployment Insurance vs Targeted Transfers: Welfare and Fiscal Tradeoffs in a HANK Model with Search-and-Matching Frictions - with Marcos Poplawski Ribeiro and Danila Smirnov
Fiscal Multipliers & the Wealthy-Hand-to-Mouth - with Pedro Brinca, Tiago Bernardino & Valter Nobrega.
In this paper we provide evidence that there are statistical and economically meaningful differences in terms of attitudes towards risk at the aggregate level across countries, as captured by country-specific estimations of the coefficient of relative risk aversion. This has important implications for fiscal policy as it leads to large differences in the output response to the same fiscal policy shock. When calibrating the risk aversion at the country level, using country-specific estimates of the coefficient of relative risk aversion, we find multipliers to the same fiscal consolidation shock to differ as much as between 0.35 and 0.55.