OxTalks is Changing
During Michaelmas Term, OxTalks will be moving to a new platform (full details are available on the Staff Gateway).
For now, continue using the current page and event submission process (freeze period dates to be advised).
If you have any questions, please contact halo@digital.ox.ac.uk
Emerging markets, household heterogeneity and exchange rate policy
I argue that household heterogeneity plays a key role in the transmission of aggregate shocks in emerging market economies. Using Mexico’s 1995 crisis as a case study, I first document empirically that working in the tradable versus non-tradable sector is a crucial determinant of the income and consumption losses of different types of households. Specifically, households in the non-tradable sector suffered much larger income and consumption losses regardless of other household characteristics. To account for the effect of this observation on macroeconomic dynamics, I construct a New Keynesian small open economy model with household heterogeneity along two dimensions: uninsurable sector-specific income and limited financial-market participation. I find that the propagation of shocks in this economy is affected by both dimensions of heterogeneity, with uninsurable sector-specific income playing a quantitatively larger role. In terms of policy, a managed exchange rate policy is more costly overall when households are heterogeneous; however, households in the non-tradable sector benefit from it.
Link to paper: drive.google.com/file/d/1scLgnlOX8ZK463mzGtLShsPdPFF1o_Os/view?usp=sharing
Please sign up for meetings here: docs.google.com/spreadsheets/d/1oFAnK-yvsv3jPAmaKUUeVdv-mw-3sJpQQnmoC0qLRa8/edit#gid=0
Date:
25 May 2021, 13:00
Venue:
Held on Zoom
Speaker:
Gabriela Cugat (Department of the International Monetary Fund)
Organising department:
Department of Economics
Part of:
Macroeconomics Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Melis Clark
