Iván Werning
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View article: Chronicle of a Dollarization Foretold: Inflation and Exchange Rates Dynamics
Chronicle of a Dollarization Foretold: Inflation and Exchange Rates Dynamics Open
We study the effects of an anticipated dollarization, announced today but planned to be implemented at some future date, in a simple open-economy model.Motivated by the profile of countries considering dollarization we make the following a…
View article: Dollarization Dynamics
Dollarization Dynamics Open
This study explores the consequences of dollarizing an economy with an initial dollar shortage.We show that the resulting transitional dynamics are tantamount to that of a "sudden stop": consumption of tradable goods fall, the real exchang…
View article: Inflation is Conflict
Inflation is Conflict Open
This paper isolates the role of conflict or disagreement on inflation in two ways.In the first part of the paper, we present a stylized model, kept purposefully away from traditional macro models.Inflation arises despite the complete absen…
View article: A Multi-Risk SIR Model with Optimally Targeted Lockdown
A Multi-Risk SIR Model with Optimally Targeted Lockdown Open
We develop a multi-risk SIR model (MR-SIR) where infection, hospitalization and fatality rates vary between groups-in particular between the "young", "the middleaged" and the "old". Our MR-SIR model enables a tractable quantitative analysi…
View article: Micro to Macro: Optimal Trade Policy With Firm Heterogeneity
Micro to Macro: Optimal Trade Policy With Firm Heterogeneity Open
The empirical observation that “large firms tend to export, whereas small firms do not” has transformed the way economists think about the determinants of international trade. Yet, it has had surprisingly little impact on how economists th…
View article: Positive Long-Run Capital Taxation: Chamley-Judd Revisited
Positive Long-Run Capital Taxation: Chamley-Judd Revisited Open
According to the Chamley-Judd result, capital should not be taxed in the long run. In this paper, we overturn this conclusion, showing that it does not follow from the very models used to derive it. For the main model in Judd (1985), we pr…
View article: Replication data for: Slow Moving Debt Crises
Replication data for: Slow Moving Debt Crises Open
We study slow moving debt crises: self-fulfilling equilibria in which high interest rates, due to the fear of a future default, lead to a gradual but faster accumulation of debt, ultimately validating investors' fear. We show that slow mov…
View article: Robots, Trade, and Luddism: A Sufficient Statistic Approach to Optimal Technology Regulation
Robots, Trade, and Luddism: A Sufficient Statistic Approach to Optimal Technology Regulation Open
Technological change, from the advent of robots to expanded trade opportunities, tends to create winners and losers.How should government policy respond?And how should the overall welfare impact of technological change on society be valued…
View article: Saving and Dissaving with Hyperbolic Discounting
Saving and Dissaving with Hyperbolic Discounting Open
We study Markov equilibria in the standard time-inconsistent hyperbolic discounting model set in discrete-time. We provide simple conditions under which all Markov equilibria feature saving or dissaving globally, for all wealth levels. Mor…
View article: Saving and Dissaving with Hyperbolic Discounting
Saving and Dissaving with Hyperbolic Discounting Open
Is the standard hyperbolic-discounting model capable of robust qualitative predictions for savings behavior? Despite results suggesting a negative answer, we provide a positive one. We give conditions under which all Markov equilibria disp…
View article: Fiscal Unions
Fiscal Unions Open
We study cross-country risk sharing as a second-best problem for members of a currency union using an open economy model with nominal rigidities and provide two key results. First, we show that if financial markets are incomplete, the valu…
View article: The Lerner Symmetry Theorem: Generalizations and Qualifications
The Lerner Symmetry Theorem: Generalizations and Qualifications Open
The Lerner Symmetry Theorem (Lerner, 1936) establishes the equivalence between import tariffs and export taxes in a simple neoclassical economy with two countries, two final goods, and no trade costs.In this paper we provide a number of ge…