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Author:Buera, Francisco J. 

Working Paper
Liquidity Traps and Monetary Policy: Managing a Credit Crunch

We study a model with heterogeneous producers that face collateral and cash in advance constraints. These two frictions give rise to a non-trivial financial market in a monetary economy. A tightening of the collateral constraint results in a credit-crunch generated recession. The model can suitable be used to study the effects on the main macroeconomic variables - and on welfare of each individual - of alternative monetary - and fiscal - policies following the credit crunch. The model reproduces several features of the recent financial crisis, like the persistent negative real interest rates, ...
Working Paper Series , Paper WP-2014-14

Working Paper
Big Push in Distorted Economies

Why don't poor countries adopt more productive technologies? Is there a role for policies that coordinate technology adoption? To answer these questions, we develop a quantitative model that features complementarity in firms' technology adoption decisions: The gains from adoption are larger when more firms adopt. When this complementarity is strong, multiple equilibria and hence coordination failures are possible. More importantly, even without equilibrium multiplicity, the model elements responsible for the complementarity can substantially amplify the effect of distortions and policies. ...
Working Paper , Paper 21-07

Report
Liquidity Traps and Monetary Policy: Managing a Credit Crunch

We study a model with heterogeneous producers that face collateral and cash-in-advance constraints. A tightening of the collateral constraint results in a credit-crunch-generated recession that reproduces several features of the ?nancial crisis that unraveled in 2007 in the United States. The model can be used to study the effects of the credit-crunch on the main macroeconomic variables and the impact of alternative policies. The policy implications regarding forward guidance are in contrast with the prevalent view in most central banks, based on the New Keynesian explanation of the liquidity ...
Staff Report , Paper 540

Journal Article
Taking Stock of the Evidence on Microfinancial Interventions

We review the empirical evidence on microfinance and asset grants to the ultra poor or microentrepreneurs and use quantitative economic theory to account for this evidence. Properly executed, these interventions can help segments of the population increase their income and consumption, but neither literature gives much reason to believe that such interventions can lead to wide-scale, transformative impacts akin to escaping aggregate poverty traps.
Review , Volume 102 , Issue 2 , Pages 173-202

Working Paper
The Global Diffusion of Ideas

We provide a tractable theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country's equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differential equations describing the evolution of the scale parameters of these distributions, i.e., countries' stocks of knowledge. In particular, the growth of a country's ...
Working Paper Series , Paper WP-2016-13

Report
The Monetary and Fiscal History of Argentina, 1960-2017

In this chapter, we review the monetary and fiscal history of Argentina for the period 1960?2017, a time during which the country suffered several balance of payments crises, three periods of hyperinflation, two defaults on government debt, and three banking crises. All told, between 1969 and 1991, after several monetary reforms, thirteen zeros had been removed from its currency. We argue that all these events are the symptom of a recurrent problem: Argentina?s unsuccessful attempts to tame the fiscal deficit. An implication of our analysis is that the future economic evolution of Argentina ...
Staff Report , Paper 580

Working Paper
The macroeconomics of microfinance

We provide a quantitative evaluation of the aggregate and distributional impact of microfinance or credit programs targeted toward small businesses. We find that the redistributive impact of microfinance is stronger in general equilibrium than in partial equilibrium, but the impact on aggregate output and capital is smaller in general equilibrium. Aggregate total factor productivity (TFP) increases with microfinance in general equilibrium but decreases in partial equilibrium. When general equilibrium effects are accounted for, scaling up the microfinance program will have only a small impact ...
Working Papers , Paper 2013-034

Newsletter
The Global Diffusion of Ideas and Its Impact on Productivity and Growth

Economic growth often comes hand in hand with the growth of trade. However, according to quantitative models that rely on standard static mechanisms, the gains from trade are fairly small. This article introduces a model to study the diffusion of ideas across countries as a means of increasing productivity and provides a quantitative assessment of the role of trade in the transmission of knowledge.
Chicago Fed Letter

Report
Liquidity Traps and Monetary Policy: Managing a Credit Crunch: Online Appendix

Staff Report , Paper 541

Working Paper
Scale and the origins of structural change

Structural change involves a broad set of trends: (i) sectoral reallocations, (ii) rich movements of productive activities between home and market, and (iii) an increase in the scale of productive units. After extending these facts, we develop a model to explain them within a unified framework. The crucial distinction between manufacturing, services, and home production is the scale of the productive unit. Scale technologies give rise to industrialization and the marketization of previously home produced activities. The rise of mass consumption leads to an expansion of manufacturing, but a ...
Working Paper Series , Paper WP-08-06

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