Seminario "Policy Rules and Large Crises in Emerging Markets"

Miércoles 29/3, 17h

Presentado por Emilio Espino
Emerging countries have increasingly adopted rules to discipline government policy. The COVID-19 shock lead to widespread suspension and modification of these rules. We study rules and flexibility in a sovereign default model with domestic fiscal and monetary policies and long-term external debt. We find welfare gains from adopting monetary targets and debt limits during normal times. Though government policy cannot itself counteract fundamental shocks hitting the economy, the adoption of rules has a significant impact on policy, macroeconomic outcomes and welfare during large, unexpected crises. We also find moderate gains from suspending monetary targets during a crisis and large losses from abandoning debt limits.

Jointly written with Julian Kozlowski, Fernando M. Martin and Juan M. Sánchez

Emilio Espino
Ph.D. in Economics, Cornell University. Associate Professor, UTDT.
Professor Espino’s research focuses on macroeconomic theory and dynamic contracts. His work has been published in journals such as Journal of Economic Theory and Quantitative Economics (Econometric Society). He is member of the Executive Board of the Latin American Econometric Society (LAMES) and Associate Editor of the Journal Macroeconomic Dynamics.

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