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Working papers

Large Devaluations, Heterogeneous Consumption Adjustments, and Macroeconomic Implications 

This paper studies massive drops in consumption across households during large devaluations associated with Sudden Stops. Using cross-country comparison and the Mexican 1994-peso crisis as a case study provides evidence that, unexpectedly, non-tradable consumption decreased considerably, as much as tradable. Then, employing micro-data, we show that non-tradable consumption falls more for higher-income households that also concentrate expenditure on non-tradable. Moreover, expenditure share in tradable is lower for higher-income households, reflecting the presence of non-linear Engel curves. Next, based on this empirical evidence, we build an open economy framework incorporating heterogeneous households and non-homothetic CES preferences to study macroeconomic aggregate response during large devaluations. We show that the propagation across economic sectors of shocks through household consumption decisions is asymmetric, depressing the production more when it starts from the tradable than the non-tradable sector. Finally, we provide evidence with sufficient statistics of amplification in consumption decline produced by the interaction between heterogeneous expenditure and MPCs.

Grants and awards: Lewis L. Clarke Data Purchase and Data Collection Award; Lewis L. Clark Conference Presentation Award; Fellowship FED of Atlanta. 

Exchange Rate Pass-Through and Invoicing Currency: Different Patterns at the Border and the Store (With Bernardo Candia and Youyou Xu).

Work in Progress

​​Closing the Connectivity Gap between the Rich and Poor: Online Governance Reform for Internet Market Failures (With Bernardo Candia and Jelena Laketic).

Grants: Clausen Center for International Business & Policy Grant, UC Berkeley, 2023; and Graduate Student Research Fellowship, LEAP at Berkeley Law, 2023.

Firms’ Price Setting and Market Power During Episodes of High Inflation (With Luis Felipe Cespedes and Patricio Toro).

Optimal Monetary Policy in a Small Open Economy with Input-Output Linkages (With Akira Ishide and Sihwan Yang).


Exchange rate pass-through, monetary policy, and real exchange rates: Iceland and the 2008 crisis (With Sebastian Edwards). Open Economies Review, Vol. 33 (2), pp. 197-230, 2022. NBER working paper. In media: VoxEU, UCLA Anderson Review.

Accumulation of reserves in emerging and developing countries: mercantilism versus insurance (With José De Gregorio). Review of World Economics,  Vol. 155, pp. 819-857, 2019. Working Paper.

International banking and cross-border effects of regulation: Lessons from Chile (With Alejandro Jara). International Journal of Central Banking, Vol. 13 No. S1, pp. 95-127, 2017. Working Paper.

Other Pre-doctoral Research:

The demand for cash: Stylized facts and substitution by electronic means of payment (With Alejandro Jara). CEPAL Review, Number 135, pp. 129-157, 2021.

International exposure of Chilean banking system: characteristics and risk (With Alejandro Jara and Faruk Miguel). Journal Economía Chilena (The Chilean Economy), Nota de Investigación Económica, Central Bank of Chile, Vol. 20 Number 3, 2017.

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