Working Papers

  1. Liquidity and Investment in General Equilibrium
    with Nicolas Caramp and Keisuke Teeple Working paper

    This paper studies the implications of trading frictions in financial markets for firms’ investment and dividend choices and their aggregate consequences.

  2. The Impact of Racial Segregation on College Attainment in Spatial Equilibrium
    with Victoria Gregory and Hannah Rubinton Working paper

    We incorporate race into an overlapping-generations spatial-equilibrium model with neighborhood spillovers. Race matters in two ways: (i) the Black-White wage gap and (ii) homophily—the preferences of individuals over the racial composition of their neighborhood. These two forces generate a Black-White college gap of 22 percentage points, explaining about 80% of the college gap in the data for the St. Louis metro area.

  3. Policy Rules and Large Crises in Emerging Markets
    with Emilio Espino, Fernando M. Martin and Juan M. Sanchez Working paper

    This paper studies a sovereign default model with fiscal and monetary policies to assess the policy response and evaluate the gains from flexibility in times of severe distress.

  4. Credit and Liquidity Policies during Large Crises
    with Mahdi Ebsim and Miguel Faria-e-Castro Working paper

    We compare firms’ financials during the Great Financial Crisis (GFC) and COVID-19. While the two crises featured similar increases in credit spreads, debt and liquid assets decreased during the GFC, but increased during COVID-19. In the cross section, leverage was the main determinant of credit spreads and investment during the GFC, but liquidity was more important during COVID-19. We augment a quantitative model of firm capital structure with a motive to hold liquid assets. The GFC resembled a combination of productivity and financial shocks, while COVID-19 also featured liquidity shocks. We study the state-dependent effects of credit and liquidity policies.

  5. An Empirical Analysis of the Cost of Borrowing
    with Miguel Faria-e-Castro and Samuel Jordan-Wood Working paper

    Within firms, borrowing rates exhibit significant dispersion even after accounting for security and observable firm characteristics. Obtaining a bank loan is cheaper than issuing a corporate bond. Changes in borrowing costs have lasting negative effects on firm-level outcomes.

Work in Progress

  1. Inequality Dynamics: A Life-Cycle Portfolio Model Perspective
    with Diego Daruich


  1. Domestic Policies and Sovereign Default
    with Emilio Espino, Fernando M. Martin and Juan M. Sanchez. American Economic Journal: Macroeconomics, Forthcoming Working paper, Publication

    A model with two essential elements, sovereign default and distortionary fiscal and monetary policies, explains the interaction between sovereign debt, default risk and inflation in emerging countries.

  2. Macroeconomic Implications of Uniform Pricing
    with Diego Daruich American Economic Journal: Macroeconomics, July 2023 Working paper, Publication

    We introduce novel data from Argentina and show that there is uniform pricing (chains set the same prices across stores both within and across regions), and prices react relatively little to local conditions. We build a model to understand the macroeconomic implications of uniform pricing. Our key finding is that consumption aggregate elasticities tend to be smaller than local elasticities, as prices react more to aggregate conditions when prices are set uniformly across regions.

  3. Long-Term Finance and Investment with Frictional Asset Markets
    American Economic Journal: Macroeconomics, 2021, vol. 13(4) Working paper, Publication

    Trading frictions in financial markets lead to a liquidity spread which increases with maturity and generates an upward sloping yield curve. Hence, trading frictions induce firms to borrow and invest at shorter horizons. Reductions in trading frictions—a new channel of financial development—can promote economic development. We use insights from the theory to measure the slope of liquidity spreads in the data.

  4. Scarring Body and Mind: The Long-Term Belief-Scarring Effects of COVID-19
    with Laura Veldkamp and Venky Venkateswaran, 2020 Jackson Hole Economic Policy Symposium Proceedings Working paper, Publication

    The largest economic cost of the COVID-19 pandemic could arise if it changed behavior long after the immediate health crisis is resolved. We show how to quantify the extent of such belief changes and determine their impact on future economic outcomes.

  5. The Tail that Wags the Economy: Belief-Driven Business Cycles and Persistent Stagnation
    with Laura Veldkamp and Venky Venkateswaran, Journal of Political Economy, 2020, vol. 128(8) Working paper, Publication

    The great recession has been more persistent than others because observing an unlikely event led us to re-assess the probability of tail events. This change in beliefs endures long after the event itself has passed.

  6. Explaining Intergenerational Mobility: The Role of Fertility and Family Transfers
    with Diego Daruich, Review of Economics Dynamics, 2020, vol. 36 Working paper, Publication

    Poor families have more children and transfer fewer resources to them. This suggests that family decisions about fertility and transfers can dampen intergenerational mobility. The model, estimated to the US in the 2000s, implies that a counterfactual flat income-fertility profile would reduce intergenerational persistence by about 7%.

  7. The Tail that Keeps the Riskless Rate Low
    with Laura Veldkamp and Venky Venkateswaran, NBER Macroeconomics Annual 2018, vol. 33 Working paper, Publication

    The 2008 financial crisis was an unlikely event led us to re-assess the probability of tail events. The knowledge that such an event can happen raises the value of riskless assets for many years.

  8. Investment and Bilateral Insurance
    with Emilio Espino and Juan Sanchez, Journal of Economic Theory 2018, vol. 176 Working paper, Publication

    Private information may limit insurance possibilities when two agents get together to pool idiosyncratic risk. However, if there is capital accumulation, bilateral insurance possibilities improve because misreporting distorts investment.

Other publications

  1. External Shocks versus Domestic Policies in Emerging Markets
    with Emilio Espino, Fernando M. Martin and Juan M. Sanchez. Federal Reserve Bank of St. Louis Review, Second Quarter 2023 Working paper, Publication

  2. Stylized Facts on the Organization of Small Business Partnerships
    with Emilio Espino and Juan M. Sanchez. Federal Reserve Bank of St. Louis Review, Foruth Quarter 2016 Working paper, Publication


  1. Safe Assets, Collateralized Lending and Monetary Policy by Moritz Lenel, BSE Summer Forum Workshop on Safety, Liquidity, and the Macroeconomy, June 2024 Discussion

  2. A Quantitative Theory of Hard and Soft Sovereign Defaults by Grey Gordon and Pablo Guerron-Quintana, NBER Emerging Markets: Capital Flows, Debt Overhang, Inflation, and Growth, Spring 2024 Discussion

  3. A Theory of Payments-Chain Crises by Saki Bigio, 2023 IEF Workshop Discussion

  4. The COVID-19 Impact on Corporate Leverage and Financial Fragility by Sharjil M. Haque and Richard Varghese, CEAR CenFIS Workshop: How is the Covid-19 experience changing finance? Discussion

  5. Can the cure kill the patient? Corporate credit interventions and debt overhang by Nicolas Crouzet and Fabrice Tourre, Barcelona Summer Forum 2021 Discussion

  6. Credit Shocks and Equilibrium Dynamics in Consumer Durable Goods Markets by Alessandro Gavazza and Andrea Lanteri, Southern Economic Association November 2018, Discussion

  7. Beauty Contests and the Term Structure by Martin Ellison and Andreas Tischbirek, Expectations in Dynamic Macroeconomics Model August 2018, Discussion