Working Papers

The Macroeconomic Impact of Paying in Dollars in Emerging Economies

Abstract
In partially dollarized emerging economies, households earn in local currency but save in dollars, while major durables such as housing and vehicles are also dollar-priced. This denomination appears welfare-improving: dollar savings and durable replacement costs appreciate with the exchange rate, providing a natural hedge. I develop and estimate a quantitative heterogeneous-agent model with lumpy durable adjustment and portfolio choice using Uruguayan microdata. Switching to local-currency pricing or restricting dollar access would, in my model, result in meaningfully sized welfare losses.
- Draft Slides

Work In Progress

Public Procurement, the Nature of Innovation, and Growth (with Jorge Zavala)

Abstract
German R&D spending remains steady while fewer firms introduce novel products. We study whether public procurement helps explain this divergence using German firm-level innovation and procurement data. We extend a standard heterogeneous-firm endogenous-growth model to allow firms to choose the composition of innovation. Procurement narrows the payoff to novel innovations and shifts effort toward incremental activity. The results suggest that contract design shapes the nature of innovation, not only the level of public support.
Economies of Scope in Transportation and Domestic Trade (with Brian C. Fujiy, Gaurav Khanna, and Brock Rowberry)

Abstract
We study how economies of scope in transportation shape domestic trade and aggregate welfare. Using firm-to-firm transaction data from India with information on transporters, we document how transporters consolidate shipments from distinct sellers and deliver them to nearby destinations. We develop a quantitative trade model in which bilateral trade costs depend on the routing choices of heterogeneous transporters. When transporters profitably group shipments, they improve firms' access to destinations and expand the extensive margin of domestic trade.

Policies for Transactional De-Dollarization: A Laboratory Study (with David Florian, Kristian Lopez Vargas, and Valeria Morales)
- Journal of Economic Behavior and Organization, 2022
- Published version Working paper Slides
- Data availability: An anonymized participant-round dataset is available upon request.
- Abstract
  Partial currency substitution typically occurs in small open economies amid economic crises. Often, the foreign currency continues to circulate even after macroeconomic stability returns. Central banks have responded by applying de-dollarization policies. We extend the model in Matsuyama et al. (1993) and implement an experiment to study the effectiveness of two policy instruments: taxes on domestic transactions in foreign currency and a reduction in the storage cost of local currency.
  We contribute to the theoretical literature by characterizing a new circulation regime for small open economies where agents use the foreign currency solely for international trade and settle domestic transactions exclusively in local currency. Our experimental evidence suggests that both taxes and storage cost reductions can foster de-dollarization by reducing foreign-currency acceptance and reinforcing the use of local currency. The reduction in local-currency storage costs is more significant and robust than the tax policy.

Modelo de Proyección Trimestral: Una actualización hasta 2019
- Banco Central de Reserva del Perú, Issue 011, 2022
- PDF
Proyecciones inmediatas y de corto plazo para la actividad económica en tiempos de la pandemia del COVID-19
- Revista Moneda, Issue 187, 2021
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