Publications
The Sentimental Propagation of Lottery Winnings: Evidence from the Spanish Christmas Lottery
with Evi Pappa and Isabel Mico-Millan, Journal of Monetary Economics , April 2024
We exploit the Spanish Christmas lottery and consumer confidence survey data to investigate the impact of highly geographically clustered lottery winnings on consumer
sentiment and durable consumption. Albeit not receiving lottery prizes, consumers in winning provinces become significantly more optimistic about the Spanish macroeconomic
conditions than those living elsewhere. This variation in sentiment is shown to be orthogonal to changes in regional fundamentals and leads to a rise in spending intentions.
Young, less educated, low-income, and unemployed individuals react stronger to the lottery shock. At the regional level, lottery wins significantly increase car licenses,
reduce unemployment, and intensify job creation and prices.
Who is Afraid of Sanctions? The Macroeconomic and Distributional Effects of the Sanctions Against Iran
Economics & Politics, Lead Article, Nov 2022
The sanctions imposed on Iran at the beginning of 2012 have simultaneously limited
the country’s access to the international financial system, levied a strict boycott on Iran’s
oil and petrochemical exports, and limited imports of intermediate goods. This paper
tries to quantify the aggregate and heterogeneous effects of these sanctions. Applying
the synthetic control method, I show that the sanctions had persistent and significant
effects on the Iranian economy. The cost reached its maximum of 19.1 percent of real
GDP four years after the application of the sanctions, and the economy has not fully recovered
after their removal. I trace the poverty dynamics for different household groups
after the sanctions by adopting a synthetic panel using Iran’s household income and expenditure
survey data. Inconsistently with the sanctions’ initial goals, poverty dynamics
suggest that households working in governmental sectors and educated households are
unaffected by the sanctions. Instead, the sanctions condemn young, illiterate, rural, or
religious minority households to poverty.
Working Papers
Monetary Policy, Economic Uncertainty, and Firms R&D Expenditure
This paper studies the state-dependent effect of monetary policy shocks on firms
research and development (R&D) expenditure in the US economy. Empirical results
suggest that a 20 basis point increase in the interest rate decreases the aggregate R&D
expenditure by 0.6 percent. Furthermore, using Compustat firm-level data, I show a
persistent decline in US firms’ R&D expenditure in response to contractionary monetary
policy shocks. The effect on R&D expenditure is stronger for interest rate hikes and
when firms face higher uncertainty. Economic uncertainty decreases firms’ leverage ratio
and makes them more financially constrained. As a result, firms become more responsive
in their R&D investment following a contractionary monetary policy shock. I use
a medium-scale DSGE model with endogenous output growth and financial frictions to
interpret the empirical results. The theoretical model highlights the importance of the
credit channel for altering the effects of monetary policy on firms’ investment in R&D in
the presence of economic uncertainty.
Economic Consequences of Public Investment News Shocks
This paper explores the macroeconomic consequences of
government investment in European Union countries from 2000 to 2020. To tackle the endogeneity of government investment, I constructs a
new instrument for public investment shocks based on narratives for European Investment
Bank (EIB) public loans. Using more than 6300 loans financing projects in 18 EU countries,
I show that the loans allocated to public firms are a good instrument for public investment
shocks. Using local projection, I find that these shocks increase output, consumption, and
employment in the economy without crowding out private investment. The cumulative
three-years public investment multiplier is higher for countries with: lower per capita
GDP, lower debt, lower uncertainty, higher local autonomy, and higher government size.
Using a medium-scale New Keynesian DSGE model, including financial friction and public
capital, I show that the news of a possible government investment increases the expected
profit of firms and weakens the credit constraint. As a result, firms can borrow more due to
a better economic perspective, and the crowding-out effect disappears.