Carlos Rondón-Moreno

We are hosting the Canadian Macroeconomics Study Group at @westernu.ca!
This year's keynote is Kjetil Storesletten @hellerhurwicz.bsky.social

Program 👉 baxter-robinson.github.io/CMSG2025_Pro...
Registration is 100 CAD (70 for students!) 🔗https://economics.uwo.ca/about-us/workshops/index.html

The doors are always open here! Come back whenever you want!

Finally, it was fantastic to have an academic excuse to reconnect with friends that I haven't seen in a very long time 👋: David Echeverry, Cesar E. Tamayo, and Luis Felipe Saenz.

The opportunity to organize a conference this big taught me many lessons, but the most important one is what a great team Eugenia Andreasen, Humberto Martínez Beltrán, and I are 🤝. Couldn't have done it without them 🙏.

This meeting was also particularly special for me, as we not only had Christiane (a key member of my Ph.D. advisor committee at @ndecon.bsky.social) but also the SCE presented the 2025 David A. Kendrick Distinguished Service Award to John Stachurski 🏆. They have both made a huge impact on my career.

As part of the conference, we featured a full-day workshop on "Heterogenous Agents Models: A Toolkit for Policy Makers" jointly organized by Central Bank of Chile Research and CEMLA. A big thank you to Matias Ossandon Busch for his support.

This marked the first time the event was hosted in Latin America 👏. A huge thank you to our distinguished plenary speakers 🎤—Enrique Mendoza, Christiane Baumeister @ndecon.bsky.social , and John Stachurski—for their insightful contributions .

💥 What a week 💥! The annual meeting of the Society for Computational Economics at the Facultad de Economía y Negocios - Universidad de Chile was a resounding success 🔥, bringing together over 150 participants from more than 20 countries 🌎. (Thread 👇)

Former graduate student Carlos Rondon Moreno and our colleague Christiane Baumeister catching up at a Central Bank of Chile conference:

The tragic landslide in Blatten gives me the excuse to tell you the story of how we found out Ice Ages existed. It's a cool story and the most important bit is rather similar to what's happening now.

Proud of this work with @juanherreno.bsky.social. We believe these insights are critical for policymakers in emerging economies.You can find our paper in the Journal of International Economics, Vol 157.

Big thanks to my advisors at @ndecon.bsky.social!

📝 Link: shorturl.at/JdJhr

To sum up: Imperfect information about income shocks, when combined with borrowing constraints, is a potent source of economic instability. Optimal macroprudential policies are even more beneficial in this setting, and their design must account for these information frictions.

In our model, this shift occurs because uninformed households, fearing the non-tradable shock might signal a worse, permanent downturn, reduce borrowing anyway, even if their borrowing capacity technically increases. The planner then doesn't need to tax as aggressively

Our Figure 11 shows the shift in optimal tax policy for a temporary non-tradable income shock (Zᴺ). With perfect information (Panel a), the tax is procyclical; with imperfect information (Panel b), it becomes countercyclical (positive correlation with income).

Consider a temporary negative shock to "non-tradable" income:
🔹 With perfect info, the best policy is often to RAISE taxes as this income falls (procyclical).
🔹 With imperfect info, our model shows the optimal tax becomes COUNTERCYCLICAL – the planner reduces taxes as this non-tradable income falls!

However, one of the most fascinating results for us was how imperfect information alters the optimal tax response depending on the specific component of income that's hit by a shock. It's not a one-size-fits-all policy.

A really important result from our analysis: this imperfect information makes well-designed policy even more critical. We found the welfare gains from an optimal debt tax can more than double when agents can't perfectly distinguish shock types. The average optimal tax also tends to be higher.

How can policymakers address this? We analyze "macroprudential policy," specifically taxing foreign debt. A central planner, who can internalize the economy-wide effects that individual households might not, can use this tool to improve stability.

Figure 1 from our paper illustrates how agents' beliefs (dotted line) about income shocks can differ from the actual shocks (solid line) under imperfect information. For example, a permanent negative income growth shock (gₜ, bottom right) might be initially misperceived as less severe.

So why is this 'not knowing' the type of income shock so crucial in our model? Agents use available data (we model this with a Kalman filter) to guess. But their beliefs can diverge from reality!

What did we find? This combination – not quite knowing if good/bad times are permanent AND having borrowing limits – can significantly increase economic instability. It can lead to "overborrowing" and make financial crises more frequent.

Alongside this, we incorporate a common feature: how much households can borrow is limited by a "collateral constraint," often tied to their income.

We explore small open economies where households face a tricky situation. They see their income change, but it's hard to tell if it's a temporary blip or a long-lasting shift in their economic conditions. This is due to "imperfect information". #InformationFrictions

🚨 Excited to share insights from a paper I co-authored with @juanherreno.bsky.social on why emerging economies often face financial crises or "Sudden Stops"! Just published in Journal of International Economics (@jintlecon.bsky.social )

📝 Link: shorturl.at/JdJhr

#Econsky #Macroeconomics

#LaTeXTip: use the --aspectratio=169-- option to fit your #beamertex slide to most modern projectors (and screeens!): \documentclass[aspectratio=169]{beamer}

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Great paper. Bequest motives, medical issues, wage risks and marriage/divorce are important drivers of lifetime wealth.

Also, great to see the joint work on one of our great former RAs at the Bank— @johanatch.bsky.social

Looking forward to today’s seminar by @mdenardi.bsky.social on “Savings and Labor Supply Over the Life Cycle” at the Central Bank of Chile. Live transmission available, don’t miss it! 🚨

#econSky @umn-econ.bsky.social

Excited to see @juanherreno.bsky.social at the Central Bank of Chile presenting his paper on the steepness of the Philips curve in distored economies.

#econsky #academicsky

Epic idea

Reserve Accumulation, Macroeconomic Stabilization, and Sovereign Risk Abstract. In the past three decades, governments in emerging markets have accumulated large amounts of international reserves, especially those with fixed

First up, "Reserve Accumulation, Macroeconomic Stabilization, and Sovereign Risk" by Cesar Sosa-Padilla (along with Javier Bianchi), published in Review of Economic Studies @reveconstudies.bsky.social. academic.oup.com/restud/artic...

Happy to see a nice summary of our paper on the March issue of @nber.org digest:

“The Unintended Consequences of Merit-Based Teacher Reform in Colombia.”

Can merit-based selection of public teachers necessarily leads to student’s learning gains?

Not always

#EconSky
www.nber.org/digest/20250...