Working Papers
“The Effects of Myopia on Fiscal Multipliers.”
Job market paper
Abstract: This paper investigates the impact of fiscal policy on economic stimulation within the context of agents who exhibit partial myopia, implying that households and firms are less forward-looking and attentive towards future events. This deviation from perfect rationality impacts the marginal propensity to consume, ultimately challenging the theory of Ricardian Equivalence. To address this, I emphasize the importance of introducing partially myopic agents into a medium-scale new Keynesian model that includes hand-to-mouth consumers. This inclusion has substantial effects on the determinacy of the model, where empirically founded values of hand-to-mouth consumers, reasonable degrees of myopia, and active monetary policy cannot all coexist. Thus, I estimate the model using Bayesian MCMC methods to fit U.S. time series data between 1984-2019 under both determinacy and indeterminacacy. Under determinacy, partially myopic agents may result in higher fiscal multipliers but significantly crowd out private investment. Furthermore, the estimated myopia parameter is 0.86, which is in alignment with Gabaix (2020). However, the data suggets a preference for an indeterminate solution characterized by low degrees of myopia and a passive monetary policy.
“Impacts from Political Conflict and Violence.”
Work in progress
Abstract: This paper examines the impacts from political conflict and violence in several empirical frameworks. First, I use a generalized least squares to study the relationship between magnitudes of political violence and growth, investment, and standards of living with a sample of 154 countries and through years 1990-2018. Given that there is a concern of reverse correlation, I use ethnic fractionalization as an instrumental variable to run two-stage least squares regressions on the correlation of intrastate acts of violence and growth and investment. Finally, I apply a panel vector-autoregression (VAR) model to study the cross-country economic effects of a shock to the magnitude of political violence in three groups of countries that have had turbulent conflicts in the late 20th century. Results show that higher levels of magnitude of violence lead to lower growth, investment, and standards of living, and these results are even more apparent with the two-stage least squares approach. Findings from the panel VARs show that cross-country effects from a political violence shock are most significant when the countries share characteristics directly related to the cause of the conflict.
Past Research
“The Impacts of Structural Adjustment Loans on Growth and Development.”
Masters Thesis
Abstract: This paper examines the social and macroeconomic effects of receiving IMF and World Bank structural adjustment loans (SALs) in South American countries within the time frame of 25 years. The IMF SALs that are relevant to the purposes of this research project are Standby Arrangements, Extended Funds Facility, and Extended Credit Facility. Using pooled OLS regression models, I test the correlation between IMF SALs and macroeconomic indicators (i.e GDP per capita growth, inflation, current account) and find no positive short or long term impact on such indicators. Furthermore, there seems to be a negative correlation between World Bank loans and IMF SALs and socio economic indicators (i.e. literacy rate, health spending, infant mortality rate), although these results are not significant. Overall, findings of this paper show that IMF and World Bank structural adjustments loans have not been effective in attaining short term or long term sustainable growth or improvements in social services.
“Sub-Saharan Africa: A Story of Foreign Economic Intervention, Political Gluttony, and Development Failures.”
Undergraduate Senior Thesis, Honors
Abstract: Upper-middle and high-income countries often use foreign economic interventions to help low and lower-middle income countries grow and develop. However, many low and lower-middle income countries experience high levels of corruption, where the state reaps the benefits of such interventions. With the rents collected from foreign countries as a source of government revenue, the state has no responsibility and obligation to provide public goods and increase standards of living for its citizens. Thus, this paper examines the extent to which centralized corruption alters the effectiveness of foreign economic interventions (official development assistance and foreign direct investment) in low income and lower-middle income countries, as classified by the World Bank. Using OLS regression analysis, the equations used interaction terms between official development assistance and corruption as well as foreign direct investment and corruption to test the marginal effects of corruption on foreign economic intervention. Additionally, to avoid endogeneity problems and spurious correlations, a two stage least squares method was used to test the individual effects of foreign economic interventions and corruption on growth and development. The results show that there are no robust marginal effects of corruption on foreign economic interventions. However, the two stage least squares regressions show that official development assistance and corruption have negative effects on development indicators.