Esteban Tisnés

Recent literature has highlighted that differences across countries in the share of Hand-to-Mouth households (HtM) are important for the transmission of aggregate shocks as well as monetary and fiscal policy. How can we explain cross-country differences in the share of hand-to-mouth households? In this paper, we first document significant heterogeneity in the share of HtM households across European countries. This heterogeneity is driven by large differences in the share of wealthy HtM households, who hold illiquid but no liquid wealth. On the contrary, the share of poor HtM, who hold neither liquid or illiquid wealth, is similar across countries. Second, we develop a two-asset life-cycle model with incomplete markets and uninsurable income risk and calibrate it to Spain. Through the lens of the model we study the role country differences in income risk, the life-cycle profile of earnings and retirement benefits. Although we report substantial differences across countries in mean income, risk and retirement benefits, results suggest that they cannot explain cross-country differences in HtM shares by themselves. On the other hand, differences in financial conditions are able to explain, ceteris-paribus, 51% of the differences in HtM shares, by explaining 68% of W-HtM shares.

Emerging market economies often face volatile capital inflows, leading to sudden stops and capital flight that provoke macroeconomic adjustments. The literature on macroprudential policy in this context has focused on the use of capital inflow taxes. However, the accumulation of foreign reserves is the most widely used prudential tool. This paper introduces market segmentation in international financial intermediation into a standard macroeconomic model of financial crises to examine its impact on optimal policy. The model features a small open economy with incomplete markets and an occasionally binding collateral constraint. The central bank uses FXI to create a wedge between domestic and international interest rates, leading to increased net foreign assets but also carry trade losses. The findings indicate that optimal foreign reserves accumulation policy leans against the wind but less aggressively than in the absence of market imperfections, due to the increasing costs of accumulating reserves.

Climate change has increased the frequency and intensity of droughts in several countries, with significant macroeconomic consequences particularly in the agricultural sector. Uruguay is one such country that has recently faced adverse weather conditions affecting its productive capacity. This work aims to complement previous studies on the topic in three main areas. First, we document asymmetries in the empirical responses of agricultural sub-sectors to weather shocks. Second, we extend a structural model to account for differences in the transmission of weather shocks across sectors. Third, instead of estimating the model using Bayesian methods, we select key parameters to replicate the impulse response functions obtained from our empirical estimations. Our results highlight important asymmetries and non-monotonic responses in the productive capacity of crops and livestock-dairy sectors following weather shocks in Uruguay.

We causally identify how firms' surprises about the fiscal situation affect their inflation expectations and credibility in the central bank. While no treatment shifts the average one-year-ahead inflation expectation, they produced sizable, systematic and heterogeneous movements in the distribution. Firms that had underestimated the debt-to-GDP ratio revised inflation expectations upward, whereas over-estimators revised them downward, so that the mean effect netted to zero. Beyond point expectations, treated firms reallocated subjective probability mass across scenarios to finance the fiscal deficit: the likelihood they assigned to orthodox deficit reduction rise and the likelihood of inflationary financing fall among initially pessimistic firms. These findings highlight how simple debt disclosures can reshape tail risks and policy beliefs even when short-run average inflation expectations do not move.