This paper introduces cash transfers targeting the poor in an incomplete marketsmodel with heterogeneous agents facing idiosyncratic risk. These transfers change the degree of insurance in the economy and affect precautionary motives asymmetrically,leading the poorest households to decrease...

This paper introduces cash transfers targeting the poor in an incomplete markets model with heterogeneous agents facing idiosyncratic risk. These transfers change the degree of insurance in the economy and a ect precautionary motives asymmetrically, leading the poorest households to decrease...

We show that, when a central bank is not fully financially backed by the treasury and faces a solvency constraint, an increase in the size or a change in the composition of it’s balance sheet (quantitative easing) can serve as a commitment device in a liquidity trap scenario. In particular,...

This paper explains two puzzling facts: international nominal bonds and equity portfolios are biased domestically. In our two-country model, holding domestic government nominal debt provides a hedge against shocks to bond returns and the impact on taxes they induce. For this result, only two...

We show that, when a central bank is not fully financially backed by the treasury and faces a solvency constraint, an increase in the size or a change in the composition of it's balance sheet (quantitative easing) can serve as a commitment device in a liquidity trap scenario. In particular, when...

I investigate the optimal auditing scheme for a revenue-maximizing tax-collection agency that observes not only reported profits, but also the level of employment at each firm. Each firm is owned by a single entrepreneur whose managerial ability is random. The optimal auditing scheme is...

This paper augments a relatively standard dynamic general equilibrium model with financial frictions in order to quantify the macroeconomic effects of the credit deepening process observed in many Latin American (LA) countries in the last decade, most notably in Brazil. In the model, a stylized...

While most economic studies of crime have focused on its determinants, we study the reverse question: does crime affect economic behavior? Being such an important social phenomenon, one would expect crime to affect economic decisions. Using local data on crime rates and savings per capita in a...

I investigate the optimal auditing scheme for a revenue-maximizing tax-collection agency that observes not only reported pro ts, but also the level of employment at each firm. Each firm is owned by a single entrepreneur whose managerial ability is random. The optimal auditing scheme is...