The last financial crisis revealed that financial imperfections and institutions play a more important role than the literature has assigned them for a long time, and it is possible to ascertain strongly that in the coming years macroeconomic research will be dominated by the study of the...

Original sin, coupled with other financial imperfections, causes macroeconomic penance of two kinds: adverse shocks have larger and more persistent effects and monetary policy becomes less effective as a shock absorber. But macroeconomic damnation is not inevitable: in some cases, suitable...

This paper discusses theoretical and practical aspects of the various unconventional central bank policies during the 2008-2009 crisis. In terms of theory, we first discuss the role of credibility in the attainment of inflationary goals once the nominal interest rate is at a lower bound, paying...

We study empirically if countries that default on their debt experience a reduction in their capital inflows as suggested by the literature. Our data contains information on (i) the defaulter countries and their creditors and (ii) bilateral foreign direct investment (FDI) flows. With this we can...

We study steady state optimal taxation in a context where firms differ in productivity and they decide whether to produce or not after comparing after-tax profits vis-à-vis an outside alternative option. The government taxes capital income, firms’ profits and labor income, but does not tax...

We analyze the IMF as a lender to countries in financial distress, highlighting the fact that it is a senior creditor. One advantage of delegating senior lending to a single institution rather than to competitive markets is that the former would be able to reach the socially optimal solution....