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Central Banks and Inequality

  • Should Central Banks Have an Inequality Objective? New Working Paper, November 2022. The answer is yes, but the details are unexpected. In a textbook model of time inconsistency in monetary policy extended to allow for heterogeneity, the optimal mandate to the central bank requires assigning more, not less, relative weight to agents with higher nominal wealth. The result can be seen as a XXI century version of Rogoff’s “conservative central banker”. Slides
  • Equality, Monetary Policy, and the Central Bank Mandate  A column for VoxEU discussing the basic ideas of the paper mentioned above.

Credible and Time Consistent Policy


Macroeconomic Fluctuations and Policy in Open Economies

  • Bond Finance, Bank Credit, and Aggregate Fluctuations in an Open Economy (with Andrés Fernández and Adam Gulan).  Journal of Monetary Economics, 2017A model of the endogenous determination for direct versus indirect finance in a dynamic small open economy.
  • Commodity Prices and Macroeconomic Policy. Rodrigo Caputo and Roberto Chang, eds., Series on Central Banking, Analysis, and Economic Policies, Central Bank of Chile, Vol. 22, 2016
  • Commodity Price Fluctuations and Monetary Policy in a Small Open Economy A chapter in Caputo and Chang (2016).
  • World Food Prices and Monetary Policy (with Luis Catao). Journal of Monetary Economics, 2015. We study a small open economy that imports a commodity (food) whose world relative price is stochastic, and derive implications for monetary policy. A novelty is to allow for incomplete risk sharing across countries, adopting Schulhofer-Wohl’s assumption of complete markets with costly transfers between agents.
  • Monetary Rules for Commodity Traders (with Luis Catao). A model of a small economy that trades commodities whose world prices are subject to random shocks, with an analysis of the dynamic and welfare implications of alternative monetary rules. We show how to derive analytical and intuitive characterizations of optimal Ramsey allocations and flexible price (natural) outcomes, not only under complete markets (as in most of the related literature) but under balanced trade.  IMF Economic Review, 2013
  • On the Sources of Fluctuations in Emerging Economies (with Andrés Fernández) An empirical investigation of stochastic trends versus financial frictions as explanations of emerging markets fluctuations. International Economic Review, 2013

Issues on Development and Trade