Working Papers
Public Debt, iMPCs & Fiscal Policy Transmission - 2024 - [ECB WP No 3106] [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)
In this paper, I examine 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; with more debt serving as a liquidity self-insurance tool, agents exhibit a weaker labor response to fiscal shocks. Theoretically, I show intertemporal marginal propensities to consume (iMPCs) are a sufficient statistics of public debt and consequently this influences fiscal multipliers. I then decompose the changes in iMPCs to those that come out of wealth distribution and policy function and I find that the primary factor driving variations in iMPCs is the change in interest rates due to the variation of government bonds. Although redistribution across households remains central to the transmission of fiscal policy, this paper is the first to show that other channels also influence discretionary fiscal policy’s overall impact, especially in economies with higher debt.
Production Networks and the Wealth Distribution- with Niccoló Battistini and Martin Spitzer (Draft Available Soon)
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
Selected Work - In - Progress
Fiscal Multipliers & the Wealthy-Hand-to-Mouth - with Pedro Brinca, Tiago Bernardino & Valter Nobrega.
Slides and Draft Available upon request. Presentations: Princeton Student Research Group, Nova SBE MacroGroup, Nova SBE Research Group, 16th Annual Meeting of the Portuguese Economic Journal.
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.