Here you will find work in progress and recent published papers:

“Valuation Effects, Exchange Rates, and Risk Sharing in Emerging Market Economies,” mimeo, co-author: Benjamín Peña, May 2024.

Abstract: We examine the issue of valuation effects in emerging market economies (EMEs), particularly the impact of exchange rate variations on their external wealth. Taking Chile as a case study, we first show that price and exchange rate-induced valuation changes have led to divergent trends between the accumulated current account and the NIIP, which improved markedly between 2019 and 2021 despite extreme social

unrest, the Covid crisis, and the resulting current account deficits. The positive valuation effects are explained by (i) the depreciation of the Chilean peso and (ii) the deficient performance of Chilean firms relative to foreign firms. We interpret these valuation changes in light of the recent literature on the role of the US as a

global insurer and show that this also holds for a sample of 20 EMEs. In particular, the correlation between the value of the currency and the NIIP is negative, and the magnitude of the effect of exchange rate changes depends, among other things, on the size of countries’ gross external positions. We show that this negative correlation is due to EMEs having been able to reduce currency mismatches markedly in the early 2000s while countries were opening financially. Our results suggest that EMEs enjoy wealth transfers from a global insurer in the international financial system.

“The Impact of Capital Controls and Macroprudential Policies: Firm Financial Constraints and Substitution Effects,” mimeo, co-authors: Eugenia Andreassen, Mauricio Jara and Alberto Undurraga, May 2024.

Abstract: Using a broad panel of public firms from a sample of emerging economies, we study the effects of capital controls (CCs) and macroprudential policies (MPs) on firm’s financial constraints. The implementation of CCs and MPs, often introduced to enhance financial stability, by restricting capital flows and credit supply, potentially intensify financial constraints for firms. Our findings indicate that CCs tend to increase financial constraints for firms, while in contrast, MPs appear to alleviate financial frictions at the firm-level. We attribute this outcome to a ’substitution channel’ by MPs, that reallocates the supply of funds from households to corporations, thus alleviating firm financial constraints. This effect is particularly pronounced when MPs target borrowers and their impact is larger for smaller firms and in countries where the relevance of banks relative to capital markets is larger.

“Median Labor Income in Chile Revised: Insights from Distributional National Accounts,” forthcoming, co-author: Manuel Taboada, Estudios de Economía, 2024.

Abstract: This study uses national accounts, household surveys, and administrative records to provide consistent distributional series between 2006 and 2020. Our reference year is 2017, because of the problems arising from the COVID pandemic when interpreting 2020 data. Our new methodology is able to correct the well-known limitations of different data sources and combine them coherently for the first time using Chilean data. In contrast to estimations in advanced economies we propose methods to estimate data that are not available, which could be use to estimate distributional series in other developing countries with limited official statistics. The validity of the imputations is verified by contrasting the results with various external references. On average, the underestimation of gross wages in the Chilean national household survey as compared to national accounts is 40%, significantly larger than other countries. About a quarter of this gap is attributed to the “missing rich” in the survey. For 2017, this equates to an estimated median gross income for dependent labor of CLP 600,000 and CLP 570,000 for all workers. The corrected mean-median income ratio (Gini) is 26% (17%) larger than in the raw survey of 2017, and falls only 6% (3%) between 2006 and 2017 compared with a larger decline of 12% (11%) in the original data.

“From dominant to producer currency pricing: Dynamics of Chilean exports,” Journal of International Economics, 103934,, Co-Auhors: Pablo García, Emiliano Luttini, Marco Rojas, 2024.

Abstract: We revisit a central question for international macroeconomics: the response of export prices and quantities to movements in the exchange rate (ER). We use granular export data for Chile and study how the effects of ER movements vary over time with the currency of invoicing and the destination of exports. For prices, we find that the short-run effects of bilateral ER movements vanish when controlling for U.S. dollar ER, which supports dominant currency pricing. However, over longer horizons a more significant role is played by bilateral ER movements, in line with the predictions of producer currency pricing. These dynamics do not depend on the invoicing currency. The results we find for quantities support the view that bilateral ER movements contribute to macroeconomic adjustment through export volumes over the medium term.


“The boom of corporate debt in emerging markets: Carry trade or save to invest?,” Journal of International Economics, Vol. 148, 103844,, Co-Author: Mauricio Jara, 2024.

Abstract: The decline in international interest rates following the global financial crisis encouraged firms in emerging markets to increase their corporate bond issuance abroad. Evidence shows that issuing offshore debt increases cash holdings, suggesting firms may exploit interest rate arbitrage. We argue that increasing contemporaneous cash holdings may also be undertaken for a “save to invest” motive to finance future investment opportunities. Using a sample of nonfinancial listed firms from 15 emerging market economies from 2001 to 2016, we show that companies accumulate cash when carry trade is favorable; however, we find that the increased cash holdings substantially revert in the following two periods, consistent with arguments for a “save to invest” motive. Indeed, offshore debt has a significant impact on both current and next-year investment.

“Las Criptomonedas: Una Mirada Escéptica y los Desafíos a la Industria Financiera y Banca Central”, Documento de Trabajo SDT 521, Departamento de Economía, Universidad de Chile, July 2021.

Abstract: Este trabajo provee un panorama general sobre criptomonedas y los desafíos de las monedas digitales de los bancos centrales. Luego de describir como funcionan las criptomonedas se argumenta que no son y, muy probablemente, nunca serán monedas. Son activos de inversión sin valor intrínseco, es decir, a diferencia del capital que se usa para producir, su uso en producción no existe. A estos activos se les conoce en economía como burbujas especulativas. Que estos criptoactivos no tengan valor no significa que su precio sea cero. Se discuten además algunos problemas de las criptomonedas, como es su uso en actividades ilegales, el elevado consumo de energía y sus implicancias sobre la capacidad de controlar flujos financieros transfronterizos. También se discute la creación de monedas digitales por parte de los bancos centrales, lo que podría reducir los costos de transacción en el sistema financiero, mejorar la seguridad y contribuir a la inclusión financiera. Sin embargo, aún hay muchos desafíos regulatorios y de diseño que resolver.