Research
Publications and Working papers
Public Spending Composition and Aggregate Volatility in an Emerging Economy (Draft in Preparation)
joint with C. Blanco
It is widely known that public spending in the form of capital investment has a direct impact on long term economic growth, particularly in developing countries like Paraguay where the initial stock of capital is low. In this paper we take a different look into public spending and ask what are the business cycle implications of its composition. The main purpose of this paper is to illustrate the effect of public spending composition on the transmission of exogenous disturbances to emerging economies. The discussion is extended to examine how other typical forms of financial imperfections in emerging economies amplify or dampen the effect of public spending composition on the transmission of exogenous shocks.
Business cycle implications of rising household credit market participation in emerging countries.
Journal of Economic Dynamics and Control; July 2020
I extend a small open emerging-economy model with a household sector financial constraint to investigate business cycle implications of a rise in household access and use of financial services. Estimating the model on Mexican data and consistent with previous empirical findings, I find that (1) a rise in household credit market participation yields larger aggregate consumption volatility and (2) the larger the fraction of households using financial services, the more amplified are the effects of shocks in the domestic economy, particularly those transmitted through the interest rate channel. I also find that: (3) The lesser financial frictions are, the lower is the increase of consumption growth and trade balance volatility driven by a rise in household credit market participation. (4) Standard measures of predictive accuracy suggest the extended model outperforms the baseline model. (5) Trend productivity shocks become a more relevant source of business cycle fluctuations.
Expansion of the Middle Class, Consumer Credit Markets and Volatility in Emerging Countries.
Ph.D. Thesis, Boston College. Available at eScolarship@BC ; 2017
Foreign shocks and aggregate price fluctuations in a small commodity exporter economy (Central Bank of Paraguay WP)
This paper examines the role of foreign shocks on aggregate prices in the small net commodity exporter economy of Paraguay. I apply the bayesian methodology developed by Jarocinski and Mackowiak and find that foreign variables such as those reflecting regional financial risk and commodity prices are highly relevant in the prediction of aggregate prices in Paraguay. Next, I estimate an over-identied SVAR model with block exogeneity restrictions in order to quantify the effect of shocks in commodity prices and regional risk on key variables, namely the Consumer Price Index, Food CPI, the exchange rate, a monthly indicator of output and the nominal interest rate. Commodity prices shocks explain a substantial percentage of movements in almost all domestic variables, particularly CPI and its food component. Regional risk have a much less important role in all domestic variables except output and the exchange rate.
Short, Policy-Related Works
Large Fiscal Consolidation Episodes in Emerging Countries: A statistical look (Preliminary Draft)
Episodes of fiscal adjustments are identified using Alesina and Ardagna' approach on a panel of 21 emerging countries. The statistical analysis suggest that expansionary episodes of fiscal adjustments: 1) are mostly characterized by spending cuts, 2) protect government investment and 3) tend to be followed by lower subsequent debt to GDP ratios.
Bank business models in Paraguay (Central Bank of Paraguay WP)
I build a large panel of banks and other financial intermediaries for the period 2006- 2017 to study which business models exist in the paraguayan financial system using the statistical methodology of Cluster Analysis.
Commodity Prices and Business Cycles in Paraguay (Central Bank of Paraguay WP)
joint with G. Biedermann and J. Baez
Paraguay is a small open economy and a net commodity exporter. We conduct a quantitative analysis to gauge the relative importance of commodity price shocks in driving the business cycle in Paraguay. For this purpose, our analysis adopts the small open economy model of Drechsel and Tenreyro. We choose their model since their extension analyzes the case of a net commodity exporting country facing exogenous international price changes and allows a double role of commodity prices: the “competitiveness effect” and “borrowing cost effect”.