Research Areas

Selected current papers

“Risk Sharing and Risk Reduction with Moral Hazard” (with Adrien Wicht and Luca Zavalloni), 2025,

This paper studies the design of a Financial Stability Fund under different incentive provisions. We generalize the flexible moral hazard framework of Georgiadis et. al. (2024), where an agent freely chooses next period’s shock distribution, to a dynamic recursive contract. Unlike the canonical model of Atkeson and Lucas (1992), this approach provides incentives based on rewarding the agent's marginal costs rather than realized outcomes. The optimal contract features bliss, as opposed to immiseration, and incentive provision does not disrupt risk-sharing; in fact, risk reduction is optimal. While neither model nests the other, we make them comparable: restricting distributions in the flexible model and back-loading incentives in the canonical one. We provide a quantitative analysis for Euro Area stressed countries, comparing the implications of each moral hazard framework. These results offer insights for the design of official lending programs when countries differ in their ability to manage endogenous risks.

“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]