2025 Theses Doctoral

Essays in Macroeconomics

Zaratiegui, Emilio

This qualitative study examines the influence of Korean media (K-media) on the ongoing identitiesconstruction of Korean American high school students. Drawing on dialogical self theory (Hermans & Hermans-Konopka, 2010) and Holland et al.’s (1998) concept of figured worlds, the research reveals how these students actively construct their identities through dynamic negotiation of multiple cultural influences.

Through my analysis, I identified four distinct visualizations of how Korean American youth navigate bicultural spaces, which I term “Identities-in-Dialogue Realms”: (1) Balanced Integrated Identities, characterized by seamless cultural integration; (2) Cultivating Calibrated Cultural Identities, featuring controlled cultural engagement with permeable boundaries; (3) Constrained Identity, marked by significant barriers to cultural integration.

This dissertation consists on three essays on macroeconomic topics, with a special focus onpolicymaking and international macroeconomics. Methodologically, they also reflect my interest in using microdata to answer macroeconomic questions. In the first chapter I show that firm heterogeneity introduces quantitatively significant costs to macroprudential regulation. In the second chapter, part of joint work with Andrés Drenik and Andrés Blanco, we document heterogeneity in labor income outcomes following nominal devaluations and explore the underlying mechanisms using employer-employee matched data from Argentina. The third chapter, which is joint work with Jesse Schreger and Pierre Yared, explores non-trivial interactions between monetary and fiscal policy that can arise as a result of limited commitment.

In the first chapter, I study the optimal design of capital controls when its effects on investment and productivity are taken into account. Capital controls, policies that restrict the movement of capital across countries, have become popular in recent years as a way of curbing excessive finan- cial flows that can threaten financial stability. At the same time, a mostly empirical literature has shown that these restrictions can have heterogeneous effects on firms, leading to capital misallocation, but these findings have not been incorporated into the models used in the field. To address this gap, I introduce a tractable way of modeling misallocation that generates a link between investment and productivity and can be easily taken to the data. Because capital controls affect investment, they lead to productivity losses. I show that, when the policymaker is constrained in their available instruments, this generates a policy trade-off between financial stability and productivity growth. I derive a sufficient statistic formula for the second-best policy, including its productivity costs. I leverage the tractability of my model to get a range of estimates for the latter using rich firm-level microdata for several European countries. The trade-off is quantitatively relevant: For baseline crisis probabilities, productivity losses switch optimal policy from a capital control to a foreign borrowing subsidy.

In the second chapter, we study the distribution of labor income during large devaluations. Across countries, inequality falls after large devaluations within the context of a surge in inflation and a fall and subsequent recovery of real labor income. To better understand inequality dynamics, we use a novel administrative dataset covering the 2002 Argentinean devaluation. We show that following a homogeneous fall in real labor income across workers, the bottom of the income distribution recovers faster than the top. Low labor mobility and lack of union coverage among high-income workers explain their slow recovery.

In the third chapter, we consider a New Keynesian model with strategic monetary and fiscal interactions. The fiscal authority maximizes social welfare. Monetary policy is delegated to a central bank with an anti-inflation bias that suffers from a lack of commitment. The impact of central bank hawkishness on debt issuance is non-monotonic because increased hawkishness reduces the benefit from fiscal stimulus while simultaneously increasing real debt capacity. Starting from high levels of hawkishness (dovishness), a marginal increase in the central bank’s anti-inflation bias decreases (increases) debt issuance.