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- ItemEssays on Sudden Stops in Capital Inflows: Determinants and Optimal Responses(2025) Gatty Sangama, Andrés; Kohn, David; Pontificia Universidad Católica de Chile. Instituto de EconomíaSudden stops in capital inflows are disruptive and costly events that can cause redistributive effects. In the first chapter, I explore the role of inequality in the design of optimal capital controls. To do so, I set up a small open production economy model with collateral constraints and two types of agents that are heterogeneous in income and borrowing capacities. I use the model to study the response of the economy to exogenous shocks that produce a tightening of the collateral constraint and sudden stops (reversals in the current account). I then solve the constrained solution of a Social Planner’s problem, which aims to avoid sudden stops and achieve redistribution. I find that inequality implies differentiated capital controls between high income and low income agents. While in normal times taxes are higher for high income households to prevent overborrowing, the planner allows low income households to borrow more to enable some redistribution. When the economy faces a sudden stop, taxes for all agents are reduced to nearly zero. Then, I design a uniform, constant capital control that allows achieving this optimal outcome. In the second chapter, I investigate the effect of extreme natural disasters on sudden stops in capital inflows (current account reversals), both empirically and quantitatively. Using a cross-country quarterly dataset, I find that the occurrence of a disaster increases the probability of a sudden stop in Emerging Economies. On average, during a disaster, in addition to a cut-off in capital inflows, these economies experience a contraction in output and other components of demand. I then extend a standard Real Business Cycle (RBC) model with collateral constraints to incorporate extreme natural disasters and examine their interaction with sudden stops. The model successfully replicates the patterns observed in the data and shows that the risk of sudden stops increases during natural disasters due to capital destruction and productivity loss. In ddition, the model captures a fact also observed in the data, sudden stops tend to be more severe when they coincide with natural disasters.
- ItemEssays on income inequality, financial crises, and fiscal policy(2024) Monroy Taborda, Sebastián; Machado, Caio; Pontificia Universidad Católica de Chile. Instituto de EconomíaIncome inequality is an important issue in the world. Understanding its causes and effects is paramount for better policy making. The effect studied in this dissertation is that of the financial crisis, in particular bank runs, as they are particularly harmful for the economy. The causes are focused on fiscal policy, particularly expenditure and tax consolidations, where a credit channel can foster inequality while the capital accumulation tends to reduce it.In the first chapter, I propose a banking model that provides a rationale for why increasing income inequality correlates with financial crises by looking at the probability of bank runs, which are recognized as triggers for financial crises. The canonical model of bank runs of Diamond & Dybvig (1983) is extended to accommodate heterogeneity in endowment levels between two groups of agents by having a mean-preserving distribution of endowments between groups. In equilibrium, the likelihood of a bank run increases with income inequality. I corroborate this finding by analyzing data for 17 countries between 1880 and 2013, where I find that even accounting for macroeconomic variables, an increased probability of a bank run is correlated with an increase in the income share held by the top percentiles of the income distribution.The second chapter examines fiscal consolidations’ impacts on income inequality in advanced and emerging economies. Using data from 31 countries (1980-2016), it employs local projections to analyze how expenditure and tax consolidations affect income distribution. The findings indicate that fiscal consolidations typically increase income inequality, benefiting the top 1% at the bottom 50% and the middle 40% expense. Credit access is a mechanism that amplifies these effects, with more pronounced inequality in advancedeconomies and nuanced impacts in emerging ones. Capital accumulation counteracts the impact of fiscal consolidations on income inequality, especially for emerging economies after a tax consolidation.
- ItemEssays on the inefficiencies of a parallel healthcare system: The case of Chile(2024) Xiong, Wei; Montero Ayala, Juan Pablo; Pontificia Universidad Católica de Chile. Instituto de EconomíaThis is a doctoral dissertation about Chile's parallel health care system. The primary chapter studies the relationship between inadequate insurance coverage and considerable price dispersion in the private sector. It explains how the two features naturally arise in the health insurance and hospital markets. Other chapters explore the pricing incentives of private hospitals and how patients make choices based on their sickness. This dissertation identifies some of the fundamental inefficiencies of health care in Chile and proposes a direction of reform.
- ItemEssays on financial aspects of business cycles(2023) Contreras Mualin, Gabriela Alejandra; Kohn, David; Pontificia Universidad Católica de Chile. Instituto de EconomíaThe first chapter explores how countries’ specialization in various commodities shapes the response of commodity exporters to global financial risk. Hard commodities, such as energy and metals, experience more substantial price declines than soft commodities. A panel SVAR analysis reveals that following an unexpected increase in global financial risk, hard commodity exporters experience a more significant decline in their commodity terms of trade, more than twice the increase in their sovereign spreads, and a larger drop in consumption and output. Motivated by this evidence, I build a small open economy model that captures the effects of global risk shocks on country spreads and how these effects depend on the type of commodities an economy exports. The model implications suggest that global risk shocks are primarily transmitted through commodity prices and that hard commodity exporters are hit harder not solely due to the composition of their exports. The second chapter investigates the interplay between firm size, cyclicality, and financial frictions using extensive Chilean firm-level data from 2008 to 2019. An innovative aspect of the empirical approach involves controlling for a new measure of firm productivity. The findings reveal substantial heterogeneity in how firms respond to aggregate economic fluctuations. When holding productivity constant, small firms display a more pronounced reaction in terms of investment, hiring, and sales to positive changes in GDP compared to larger firms. However, the link between cyclicality and firm size diminishes when considering firms with similar productivity and financial conditions, indicating that financial constraints play a crucial role in explaining the diverse responses across firms to aggregate economic fluctuations. These results support a financial accelerator mechanism, suggesting that, among equally productive firms, the higher cyclicality of smaller Chilean firms compared to larger ones is linked to differences in access to financing.
- ItemEssays on dynamic models applied to the Pension Fund Management and Banking Industry in Chile(2012) Flores Arévalo, Yarela Viviana; Valdés P., Salvador; Pontificia Universidad Católica de Chile. Instituto de EconomíaEn economía, ha existido un permanente interés en la estimación de modelos estructurales realistas de decisiones de las firmas. Exceptuando algunos casos notables, la mayor parte de los estudios aplicados a industrias oligopólicas utilizan metodologías basadas en modelos simplificados del comportamiento de las firmas en ambientes puramente estáticos. En los últimos años han surgido propuestas metodológicas que permiten enfrentar la estimación de modelos más complejos que incluyen relaciones intertemporales y varios agentes. Esta tesis estudia mediante dos modelos empíricos la modelación dinámica de las industrias de las Administradoras de Fondos de Pensiones y Bancaria en Chile. El primer trabajo entrega una aplicación de la reciente metodología de Bajari, Berkard y Levin (2007) que permite estimar juegos dinámicos mediante un algoritmo en dos etapas que no requiere computar el equilibrio perfecto. Esta metodología novedosa aún cuenta con muy pocas aplicaciones que hayan explotado sus ventajas, entre ellas su capacidad de modelar relaciones dinámicas con múltiples agentes. En este trabajo se desarrolla una aplicación concreta de esta metodología en la industria chilena de AFP, que cumple el requisito de estar dominada por relaciones intertemporales en la determinación de sus precios y cantidades de equilibrio. Los resultados confirman el gran potencial que tiene esta metodología para estimar modelos para industrias de estructura compleja, y ofrecen hallazgos de interés general para la política económica. En el segundo trabajo se estiman y comparan los resultados de medir el poder de mercado con un enfoque estático versus un enfoque dinámico. Estas dos perspectivas se contrastan en cada una de las dos familias de métodos más usadas en la literatura de medición del poder de mercado, que son la variación conjetural (o parámetro de conducta) y el test H de Panzar y Rosse. La aplicación empírica es para datos de la banca chilena en el período 1990-2007. Encontramos que el tradicional uso de modelos estáticos sería inadecuado y entregaría parámetros sesgados. Los resultados de los modelos dinámicos revelan que las empresas que conforman la banca chilena poseen un poder de mercado significativo, que los modelos estáticos son incapaces de detectar. En el caso de la banca chilena se observa, además, que la desregulación que se aplicó a fines de los noventa fue de una naturaleza tal, que no afectó los niveles de competencia en la industria bancaria, de acuerdo al test H. Como lección más general, se concluye que las relaciones intertemporales en la oferta y en la demanda de crédito son muy importantes para la correcta estimación del poder de mercado en las industrias bancarias.
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