Research Areas

• Macroeconomic policy and fiscal and monetary unions
• Financial stability, sovereign debt and official lending
• Labor market reforms and pension systems
• Dynamic contracts with limited commitment and enforcement
• Subjective beliefs and learning in macroeconomics

Selected current papers

• “Risk Sharing and Risk Reduction with Moral Hazard” (with Adrien Wicht and Luca Zavalloni), 2026,

  Official lending programs aim to stabilize and strengthen financially stressed economies, while having incentives for the country to act with the same aim. However, the capacity of a country to improve its risk profile depends on whether the risk distribution is exoge- nous and, in this case, if the risk can be improved with effort, or endogenous, and risk can be reduced by the choice of distribution. The program designer knows the coun- try’s feasible distributions but cannot contract on effort, in the exogenous case, or on a specific choice of distribution, in the endogenous case; it must design appropriate incen- tives. The canonical moral hazard theory addresses the former and incentives rely on performance: rewards and punishments, which disrupt risk sharing. The flexible moral hazard theory addresses the latter and incentives are provided by ex ante cost com- pensations, which do not undermine risk-sharing. Read more In a general framework of dynamic contracts: canonical moral hazard incentives lead, in general, to welfare immiseration; instead, dynamic flexible moral hazard incentives lead to welfare bliss, but also no-risk (risk bliss). We introduce a novel entropy-based cost where no-risk it too costly. We also show that back-loading incentives through subcontracts reconciles canonical moral hazard with improved risk sharing. We calibrate these different programs to stressed Euro Area countries and compare them as dynamic constraint-efficient contracts with enforcement and different incentive constraints, unveiling sizeable distinct effects on business-cycle dynamics and welfare.

[Link]

Selected recent publications

• “On the Optimal Design of a Financial Stability Fund” (with Árpád Ábrahám, Eva Cárceles-Poveda and Yan Liu), Forthcoming, Review of Economic Studies [Link]
• “Making Sovereign Debt Safe with a Financial Stability Fund” (with Yan Liu and Adrien Wicht), 2023, JIE, 145, 103834. [Link]
• “On a lender of last resort with a central bank and a stability fund” (with Giorgio Callegari, Adrien Wicht and Luca Zavalloni), 2023, RED, 50, 106-130. [Link]
• “A Worker’s Backpack as Alternative to the Spanish PAYG Pension System” (with Julián Díaz-Saavedra and João Brogueira de Sousa), 2023 JEEA, 21(5), 1944-1993. [Link]