Abstract

Emerging-market sovereigns are not fully excluded from private credit during default. I document this using disbursement data from the World Bank International Debt Statistics across 66 default episodes in the Asonuma and Trebesch (2016) database. The in-default flow is real but limited — about two-thirds below the non-default level — and front-loaded: the first half of an episode receives roughly 3.7 times what the second half receives. Is this in-default access good for the sovereign? On the one hand, it can help the government smooth its expenditure through stressful times — an insurance effect. On the other hand, it can weaken the sovereign’s commitment to repay, and regular-market lenders respond with higher spreads in normal times —a commitment effect. To weigh the two, I develop a sovereign-default model with two sequentially accessed private markets: defaulting on the regular market does not exclude the sovereign from private credit but sends it to a second market whose lenders lend during default, under an output penalty. The model is calibrated to Colombia at annual frequency. Removing the second market makes the sovereign better off by 0.28% in consumption-equivalent terms at the ergodic center, with gains positive at every income state: at the calibrated parameters, the commitment effect dominates the insurance effect. The result reverses only under sufficiently fast re-entry to the regular market, and the calibrated economy sits well inside the region where removal helps. The equilibrium can be read as a coordination failure among private lenders that hurts the borrower itself.

Presented at: UMN-UW Graduate Workshop; UMN Sandor Poster Conference

Abstract

We examine market entry and post-entry debt dynamics in Frontier Economies by grouping countries based on durability of market access using a two-step framework combining first Eurobond issuance with the reliance on private external creditors, validated through an unsupervised K-mean clustering. A discrete-time event LOGIT model finds that favorable global liquidity conditions and investor appetite open issuance windows for countries, but domestic pull factors—income, institutions, growth, and reserve buffers—ultimately determine success of market entry. Post-entry, Frontier Economies shift rapidly toward market borrowing, with looser fiscal stance as new financing source is unlocked. Along increased exposure to rollover and global financial cycle risks, debt decomposition exercise shows a worsening interest–growth differential and rising debt, driven mainly by primary deficits and higher interest burdens. Results underscore the need for credible medium-term fiscal frameworks, stronger debt management, and reserve buffers to manage the transition to market financing.

Presented at: Sovereign Debt Workshop at International Monetary Fund

Abstract

We identify the stochastic process of individual rental rates by combining the PSID with external rent indexes, because a household panel alone cannot separate the persistence of rent risk from permanent cross-household heterogeneity: the two are near-observationally-equivalent at short panel lengths. Aggregate indexes point-identify the market component, which is at or near a unit root; netting it out identifies the idiosyncratic component, whose permanent variance is interior rather than at a boundary; and new-tenant versus sitting-tenant indexes measure the re-entry margin as a dispersed re-draw rather than a predictable discount. Carried through an estimated life-cycle tenure model, the process overturns the presumption that rent risk pushes households into owning: removing all rental-rate risk raises aggregate home-ownership by 3.29 percentage points, because the dominant force is not the insurance value of owning but the lock-in value of cheap rental draws. Renters holding expensive draws buy at twice the rate of those holding cheap ones, and the welfare incidence of rent risk is sharply bottom-loaded: removing it is worth +6.8 percent of lifetime consumption to the poorest quintile. A security-of-tenure policy that makes rental deals portable supplies the insurance directly, releases locked-in renters — raising ownership by 0.82 points rather than crowding it out — and delivers +2.03 percent to the poorest quintile. What looks like a preference for renting is, in substantial part, a portfolio position in rental claims.

Presented at: (coauthor) Society for Advancements in Economic Theory (SAET, Rio - 2026)

Abstract

China’s 2017 National Sword cut allowable contamination in imported recyclables to 0.5%. We study the U.S. recycling sector’s response in trade, processing, dumping, and prices. We build a two-country open circular-economy model where households generate waste, and waste managers either recycle or dump domestic and imported waste to supply a recycled input used with labor and capital. Calibrated to U.S. plastic-waste data, the model quantifies changes in recycling rates, trade volumes, and allocations under alternative policies.