"Tracking R of COVID-19: A New Real-Time Estimation Using the Kalman Filter" (with Francisco Arroyo, Francisco Bullano and Simas Kučinskas)
Abstract: We develop a new method for estimating the effective reproduction number of an infectious disease (R) and apply it to track the dynamics of COVID-19. The method is based on the fact that in the SIR model, R is linearly related to the growth rate of the number of infected individuals. This time-varying growth rate is estimated using the Kalman filter from data on new cases. The method is very easy to apply in practice, and it performs well even when the number of infected individuals is imperfectly measured, or the infection does not follow the SIR model. Our estimates of R for COVID-19 for 124 countries across
the world are provided in an interactive online dashboard, and they are used to assess the effectiveness of non-pharmaceutical interventions in a sample of 14 European countries.
Abstract: We relax the perfect information assumption in a small open economy with collateral constraints. Agents observe income growth but do not perceive whether the underlying shocks are permanent or transitory. The likelihood and severity of financial crises are increased by the interaction between the information friction and a pecuniary externality that emerges when agents use as collateral an asset valued at market prices. Due to a more significant welfare loss, the optimal tax to restore constrained efficiency is six times larger than under perfect information.
Abstract: In this paper, I argue that the optimal design of a fiscal consolidation plan must consider the transition dynamics of the economy and be chosen such that either welfare (or another given measure of prosperity) is maximized. In the context of a small open economy, I study the optimal design of a fiscal consolidation plan under different monetary policy regimes and, in particular, the implications of reducing debt under a currency peg. Two main lessons are derived from the results. First, consolidation is costly enough regarding welfare, so that the fiscal authority would like to implement it at a very slow pace. If the government is forced to do it by a certain deadline, the welfare maximizing path will reduce the losses but will not be able to offset them. Second, from the output perspective, the optimal consolidation path under an independent monetary regime leads to a positive response of aggregate demand. While, under the currency peg, the optimal path induces an economic recession. Devaluation seems to be a key factor in stabilizing output during fiscal consolidation.
Abstract: There is a vigorous debate on the increasing use of formal mathematical methods in Economics. However, most empirical studies tackling this topic struggle with little data limitations and availability. We try to overcome this challenge by constructing a database characterizing the socio-demographic background and academic output of a survey of 438 scholars. Our sample includes Economics Nobel Prize winners; scholars who have won at least one of six prestigious recognitions in Economics; and a group of faculty members randomly selected from the top twenty Economics departments in the world. Our results provide concrete evidence of the mathematization in Economics. Specifically, we provide statistical evidence on the increasing number of equations and econometric outputs per article. We find that over time, these two variables have suffered four structural breaks. Three of them have been increasing ones. Furthermore, we found that the training and use of mathematics has a positive correlation with the probability of winning a Nobel Prize. It also appears that being an empirical researcher as measured by the average number of econometric outputs per paper has a negative correlation with someone’s academic career success.
University of Notre Dame
2018 Outstanding Graduate Student Teaching Award Recipient.