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Working Paper
Every Cloud has a Silver Lining: Cleansing Effects of the Portuguese Financial Crisis
Using firm-level data, this paper shows that the Portuguese financial crisis was a period of intensified productivity-enhancing reallocation. Aggregate productivity gains, both in manufacturing and services, came from relatively higher contributions of entering and exiting firms and from reallocation of resources between surviving firms. At the microlevel, the crisis reduced the probability of survival for high- and low-productivity firms, but it hit low-productivity firms disproportionately harder. We also found important heterogeneous effects across economic sectors regarding input ...
Working Paper
The Effect of Monetary Policy on Housing Tenure Choice as an Explanation for the Price Puzzle
In this paper we provide an alternative explanation for the price puzzle (Sims 1992) based on the effect of monetary policy on housing tenure choice and the weight of the shelter component in overall CPI. In the presence of nominal or financial frictions, when interest rates increase, the real cost of owning a house increases, and this increase may make some people prefer to rent instead of buying. This change in consumption behavior increases the price of rents relative to other goods. Starting in 1983, homeownership costs are based on a measure of implied owner equivalent rent, which is ...
Working Paper
Global Spillovers of a China Hard Landing
China?s economy has become larger and more interconnected with the rest of the world, thus raising the possibility that acute financial stress in China may lead to global financial instability. This paper analyzes the potential spillovers of such an event to the rest of the world with three methodologies: a VAR, an event study, and a DSGE model. We find the sentiment channel to be the primary spillover channel to the United States, affecting global risk aversion and asset prices such as equity prices and the dollar, in addition to modest real effects through the trade channel. In comparison, ...
Discussion Paper
Estimating the importance of monetary policy shocks for variation in the U.S. homeownership rate
Being a homeowner is one of the tenets of the American dream. In general, relative to renting, people see homeownership as a path to wealth through the usual appreciation of the house prices and the forced savings through mortgage payments but also a path to financial stability through more stable and predictable housing costs (Young et al., 2023).
Working Paper
Monetary Policy, Housing Rents and Inflation Dynamics
Working Paper
Learning, Prices, and Firm Dynamics
We document new facts about the evolution of firm performance and prices in international markets, and propose a theory of firm dynamics emphasizing the interaction between learning about demand and quality choice to explain the observed patterns. Using data from the Portuguese manufacturing sector, we find that: (1) firms with longer spells of activity in export destinations tend to ship larger quantities at lower prices; (2) older exporters tend to use more expensive inputs; (3) revenue growth within destinations (conditional on initial size) tends to decline with market experience; and (4) ...
Discussion Paper
Debt Statistics a la Carte : Alternative Recipes for Measuring Government Indebtedness
In this note, we apply our same measurement techniques to the debts of Greece, Ireland and Portugal and show that plausible alternative measures of indebtedness suggest that Greece is anywhere from as much as 50% more indebted, to as little as half as indebted as either Portugal or Ireland. We argue that most reasonable measures imply that Greece is far less indebted than is commonly reported, and that indebtedness levels across these three economies are roughly similar.
Working Paper
From Micro to Macro: A Note on the Analysis of Aggregate Productivity Dynamics Using Firm-Level Data
In the empirical literature, the analysis of aggregate productivity dynamics using firm-level productivity has mostly been based on changes in the mean of log-productivity. This paper shows that there can be substantial quantitative and qualitative differences in the results relative to when the analysis is based on changes in the mean of productivity, and discusses the circumstances under which such differences are likely to happen. We use firm-level data for Portugal for the period 2006-2015 to illustrate the point. When the mean of productivity is used, we estimate that TFP and labor ...
Newsletter
Debt Statistics a La Carte: Alternative Recipes for Measuring Government Indebtedness
According to Eurostat, the Greek government owed ?317 billion in debt at the end of 2014. This is equivalent to more than 177% of gross domestic product (GDP) or 387% of tax revenue, and amounts to almost ?30,000 per person. This seems like a very large sum. For comparison, of the other highly indebted European countries that received financial assistance, Portuguese government debt amounted to 130% of GDP, while Irish government debt amounted to 110% of GDP