Contact Information
Department of Economics
Northwestern University
2211 Campus Drive
Evanston, IL 60208
Phone: 224-600-1394
santiagocamara2022@u.northwestern.edu
Education
Ph.D., Economics, Northwestern University, 2023 (expected)
MA, Economics, Northwestern University, 2018
MA, Economics, Universidad de San Andres, 2015
BA, Economics, Universidad de Buenos Aires, 2013
Primary Fields of Specialization
International Macroeconomics, Monetary Policy
Secondary Fields of Specialization
Corporate Finance, International Trade
Curriculum Vitae
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Job Market Paper
“Borrowing Constraints in Emerging Markets”, joint work with Maximo Sangiacomo (BCRA)
Abstract: Borrowing constraints are a key component of modern international macroeconomic models. The analysis of Emerging Markets (EM) economies generally assumes collateral borrowing constraints, i.e., firms’ access to debt is constrained by the value of their collateralized assets. Using credit registry data from Argentina for the period 1998-2020 we show that less than 15% of firms’ debt is based on the value of collateralized assets, with the remaining 85% based on firms’ cash flows. Exploiting central bank regulations over banks’ capital requirements and credit policies we argue that the most prevalent borrowing constraints is defined in terms of the ratio of their interest payments to a measure of their present and past cash flows, akin to the interest coverage borrowing constraint studied by the corporate finance literature. We claim that this result can be extrapolated to other EMs by showing that firms’ interest payments are strongly and positively correlated with their cash flows for a panel of firms from 13 EMs, a novel stylized fact to the literature. Lastly, we argue that EMs exhibit a greater share of interest sensitive borrowing constraints than the US and other Advanced Economies. From a structural point of view, we show that in an otherwise standard small open economy DSGE model, an interest coverage borrowing constraints leads to significantly stronger amplification of foreign interest rate shocks compared to the standard collateral constraint. This greater amplification provides a solution to the Spillover Puzzle of US monetary policy by which EMs experience greater negative effects than Advanced Economies after a US interest rate hike. In terms of policy implications, this greater amplification leads to managed exchange rate policy being more costly in the presence of an interest coverage constraint, given their greater interest rate sensitivity, compared to the standard collateral borrowing constraint.
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Fellowships, Grants & Awards
Northwestern TGS. Graduate Student Research Grant 2022.
Inter-American Development Bank (IADB): “Trade & Integration in the Post COVID World”. 2020.
Banco de Chile: “Summer Research Grant”. 2020
“Julio H. G. Olivera” Prize for Best Paper at the AAEP Annual Meeting. Awarded by the Academia Nacional de Ciencias Economicas. November 2019.
Becker Friedman Institute. Macro Finance Research Program. Latin America Early Career Scholar Program.
Universidad de San Andres. Fellowship that covered tuition on MA program.
Consejo Interuniversitario Nacional, Universidad de Buenos Aires. Research Scholarship 2012-2014.
Other Research Papers
This paper quantifies the spillovers of US monetary policy in Emerging Market economies. By imposing sign restrictions on the high-frequency surprises of the Fed Fund Futures and the S&P 500 I am able to identify two distinct FOMC shocks: a pure US monetary policy and an information disclosure shock. On the one hand, a US tightening caused by a pure US monetary policy shock produces a recession, an exchange rate depreciation and tighter financial conditions. On the other hand, a tightening of US monetary policy caused by the FOMC disclosing positive information about the state of the US economy produces an economic expansion, an exchange rate appreciation and laxer financial conditions. These results help explain atypical dynamics found by recent literature. Augmenting the benchmark model with additional variables I argue that the financial channel is the main propagation mechanism of US interest rates into Emerging Markets. Furthermore, the quantitative impact of these FOMC shocks appear to depend on the Emerging Market’s exchange rate regime and its dependency on commodity good exports.
Download paper: https://arxiv.org/pdf/2111.08631.pdf
The Transmission of US Monetary Policy Shocks: The Role of Investment & Financial Heterogeneity. Joint work with S. Ramirez Venegas (CMF).
This paper studies the transmission of US monetary policy shocks into Emerging Markets emphasizing the role of investment and financial heterogeneity. First, we use a panel SVAR model to show that a US interest tightening leads to a persistent recession in Emerging Markets driven by a sharp reduction in aggregate investment. Second, we study the role of firms’ financial heterogeneity in the transmission of US interest rate shocks by exploiting detailed balance sheet dataset from Chile. We find that more indebted firms experience greater drops in investment in response to a US tightening shock than less indebted firms. This result is at odds with recent evidence from US firms, even when using the same identification strategy and econometric methods. Third, we rationalize this finding using a stylized model of heterogeneous firms subject to a tightening leverage constraint. Finally, we present evidence in support of this hypothesis as well as robustness checks to our main results. Overall, our results suggests that the transmission channel of US monetary policy shocks within and outside the US differ, a result novel to the literature.
Download paper: https://arxiv.org/pdf/2209.11150.pdf
Sterilized FX Interventions: Benefits and Risks. Joint work with Lawrence Christiano (Northwestern University) and Husnu Dalgic (Mannheim University).
In recent decades central bankers in many countries use sterilized intervention to smooth exchange rate fluctuations while interest rate policy is used to meet domestic policy objectives about inflation and output. This approach to policy contemplates that central bankers in effect have two tools. We explain why it is that in standard open economy models, monetary policy makers in fact have only one tool. We discuss what extra model ingredients are required to justify the second tool, which creates the possibility of pursing domestic and foreign objectives simultaneously. We use a small open economy model to illustrate our observations and to discuss the benefits and potential pitfalls of using the two tools, when circumstances justify the availability of both tools. In the model, there are financial shocks that shift the exchange rate and disrupt local demand by inflicting capital losses and gains on the balance sheets of investing firms. We investigate the welfare consequences of using sterilized foreign asset purchases and sales to mitigate these disruptions, by minimizing potentially disruptive interest rate changes. We also examine the risk that the central bank under-estimates the persistence of a financial market shock and that sterilized intervention leads it to run dangerously low on foreign reserves.
It’s not always about money, sometimes it’s about sending a message. Joint work with Yong Cai (Northwestern University) and Nicholas Capel (Amazon).
This paper introduces a transparent framework to identify the informational content of FOMC announcements. We do so by modelling the expectations of the FOMC and private sector agents using state of the art computational linguistic tools on both FOMC statements and New York Times articles. We identify the informational content of FOMC announcements as the projection of high frequency movements in financial assets onto differences in expectations. Our recovered series is intuitively reasonable and shows that information disclosure has a significant impact on the yields of short-term government bonds.
Download paper: https://arxiv.org/pdf/2111.06365.pdf
Granular Linkages, Supplier Cost Shocks & Export Performance.
This paper presents evidence on the granular nature of firms’ network of foreign suppliers and studies its implications for the impact of supplier shocks on domestic firms’ performance. To demonstrate this, I use customs level information on transactions between Argentinean firms and foreign firms. I highlight two novel stylized facts: (i) the distribution of domestic firms’ number of foreign suppliers is highly skewed with the median firm reporting linkages with only two, (ii) firms focus imported value on one top-supplier, even when controlling for firm size. Motivated by these facts I construct a theoretical framework of heterogeneous firms subject to search frictions in the market for foreign suppliers. Through a calibration exercise I study the framework’s predictions and test them in the data using a shift-share identification strategy. Results present evidence of significant frictions in the market for foreign suppliers and strong import-export complementarities.
Download paper: https://arxiv.org/pdf/2203.07282.pdf
Work in Progress:
The Trade Finance Doom Loop: Sovereign default, international trade and firm heterogeneity. Joint work with Maximo Sangiacomo.
Sovereign default crises are associated with deep recessions and a collapse of international trade. This paper introduces a new channel through which an increase in sovereign risk leads to a sharp contraction in economic activity, productivity and international trade via a tightening of working capital constraints that hit exporting and importing activities particularly hard. Matching highly detailed firm-customs-credit registry data sets this paper measures the causal impact of increases in sovereign risk on firms’ bank debt, exports and imports. We find that firms highly exposed to sovereign risk experienced lower debt, export and import growth. Furthermore, I show that firms with higher working capital needs (highly indebted firms) experienced lower export growth than firms less intensive in working capital. We use both micro, macro and estimated elasticities from Argentinean data as empirical targets for estimating the structural model. In a counterfactual analysis, we find that heightened sovereign risk was responsible for one-half of the observed output decline and two-thirds of export decline during the 2018-2019 crisis. These results are supporting evidence that the new channel presented in this paper is relevant in shaping both micro and macro level dynamics.
Teaching
Teaching Evaluation (ECON 310 Microeconomics) Prof. Pavan
References
Prof. Martin Eichenbaum (Committee Chair)
Prof. Lawrence Christiano
Prof. Giorgio Primiceri
Prof. Matthew Rognlie
Personal website: https://www.santiagocamara.com/