This paper examines the role of sovereign default beliefs for macroeconomic fluctuations and stabilisation policy in a small open economy where fiscal solvency is a critical problem. We set up and estimate a DSGE model on Turkish data and show that accounting for sovereign risk significantly...

This paper examines the role of sovereign default beliefs for macroeconomic fluctuations and stabilization policy in a small open economy where fiscal solvency is a critical problem. We set up and estimate a DSGE model on Turkish data and show that accounting for sovereign risk significantly...

An immigration shock has an ambiguous effect on inflation. On one hand, aggregate consumption increases with a suddenly larger population; this “demand channel” creates inflationary pressures. On the other hand, the labor market becomes more slack as immigrants search for jobs, containing...

Roughly one third of migrants worldwide reside in developing countries, yet most papers on the macroeconomic effects of immigration focus on advanced economies. We investigate the medium- and long-term effects of immigration in an emerging country, considering a salient feature of this type of...

Spanish Abstract: En este trabajo se estima el efecto multiplicador del gasto total del gobierno central y tres de sus componentes: consumo de gobierno, transferencias e inversión pública. Encontramos que el multiplicador del gasto total está en torno a 1, el consumo de gobierno y la...

This paper offers an explanation for the substantial decline in income inequality in Latin America during the 2000s, which is known to have been mainly driven by a decline in the skill premium. The 2000s were characterized by an economic expansion concentrated on low-skill-intensive service...

This paper studies how the spending side of fiscal policy reacts to the business cycle. I find that between 2000 and 2012, government spending is forward-looking in a number of countries — it reacts to forecasts of economic activity rather than to past economic realizations. I also study...