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Domestic Policies and Sovereign Default

By Emilio Espino, Julian Kozlowski, Fernando M. Martin, and Juan M. Sánchez

American Economic Journal: Macroeconomics

A model with two essential elements, sovereign default and distortionary fiscal and monetary policies, explains the interaction between sovereign debt, default risk and inflation in emerging countries. We derive conditions under which monetary policy is...

Large Shocks Travel Fast

By Alberto Cavallo, Francesco Lippi, and Ken Miyahara

American Economic Review: Insights

We document a sizeable increase in the frequency of price adjustments following the large energy shocks of 2022. We use a tractable New Keynesian model, calibrated to the pre-shock data, to interpret such a pattern. The calibration highlights the state...

Scoring Strategic Agents

By Ian Ball

American Economic Journal: Microeconomics

I introduce a model of predictive scoring. A receiver wants to predict a sender’s quality. An intermediary observes multiple features of the sender and aggregates them into a score. Based on the score, the receiver makes a decision. The sender prefer...