Research

Working Papers

Private Debt Flows During Sovereign Default Episodes

Abstract

In this paper, I examine private debt flows during sovereign default episodes. Using default datasets from Asonuma and Trebesch (2016), Reinhart (2009), along with Private New Commitment data from the World Bank’s International Debt Statistics, I document two empirical patterns: 1) countries were not fully cut off from private markets during default episodes, and 2) they borrowed more at the start of the episode than at the end of the episode. To explain these, I introduce a one-period debt model with limited commitment and two private markets with sequential access. I show that the existence of a second market results in welfare loss by reducing the costs of default.

Homeownership as Rental Risk Insurance with Jakub M. Pawelczak

Abstract

Why do households choose to own rather than rent, even when ownership requires large upfront costs and long-term commitments? This paper proposes that homeownership serves as insurance against rental-price risk. Using panel data we document that rental risk rises with age. To quantify the implications of this risk, we develop a life-cycle model in which heterogeneous households choose between renting and owning under income, rent, and house price shocks, subject to borrowing constraints, moving costs, and bequest motives. Because of rental risk,  homeownership rate increases by 0.7 percentage points-indicating that the desire to self-insure against uninsurable rent shocks accounts for a significant share of observed ownership. The mechanism operates primarily through the extensive margin: higher rental volatility encourages transitions into ownership, especially for middle-aged households near the down payment threshold. These findings highlight a previously underappreciated motive for homeownership and suggest that volatility in rental markets can have first-order effects on tenure decisions and welfare.

Research in Progress

Wasteonomics: Recyclable Waste Trade with Pilar Barros and Ekin Ulusoy

Corporate Balance Sheet Mismatch and Rollover Crises