Research

Working papers

Unequal Transmission: Monetary Policy and Household Consumption in India

with Aditi Singh · July 2025 (first version December 2024) · Draft on SSRN

Abstract

This paper examines the real effects of monetary policy in India through the lens of household-level heterogeneity. Using detailed microdata on consumption and asset holdings, we show that monetary policy shocks have significant effects on household consumption. Importantly, these effects vary systematically with households' positions in the wealth distribution. Households facing tighter financial constraints—those with limited liquid assets—exhibit stronger consumption responses to monetary policy shocks. By linking consumption data with asset portfolio information, we highlight the role of financial heterogeneity in shaping the transmission of monetary policy. Our findings underscore the importance of accounting for household-level differences in wealth and liquidity when evaluating the effectiveness of monetary policy.

Presented at SERI, Shiv Nadar IoE, Ashoka University, Delhi School of Economics and Hamilton College.

Identifying Hand-to-Mouth Households: Evidence from India

with Vivek Gupta and Aditi Singh · July 2025 (first version October 2024) · Draft on SSRN

Abstract

This paper identifies the share of poor and wealthy hand-to-mouth (HtM) households in India. Wealthy HtM households hold substantial illiquid assets—such as housing and gold jewelry—but have limited liquid wealth, including cash and checking accounts. In contrast, poor HtM households lack both liquid and illiquid assets. We combine consumption and income data from CMIE with asset portfolio data from AIDIS using machine learning techniques, and apply the classification methodology of Kaplan, Violante, and Weidner (2014) to categorize households. We find that 47% of Indian households are hand-to-mouth, out of which 85% are wealthy HtM and 15% are poor HtM. While wealthy HtM households resemble non-HtM households in demographics and asset holdings, they exhibit high marginal propensities to consume out of transitory income shocks, similar to poor HtM households.

Presented at Shiv Nadar IoE, Ashoka University, Delhi School of Economics and Hamilton College.

Optimal Time-Consistent Monetary Policy and Sovereign Debt Currency Denomination

Single-authored · January 2023 · PDF

Abstract

In the past two decades, the share of external sovereign debt in emerging economies denominated in foreign currency has fallen. I document that in Brazil, Colombia, Mexico and Peru, foreign currency debt was mainly substituted by debt denominated in local currency, while indexed debt represented a small proportion. In Uruguay, on the contrary, foreign currency debt was largely substituted by inflation-indexed debt. To study these differences, I use a small open economy model in which each period, a government that cannot default and lacks commitment optimally chooses inflation and the issuance of foreign currency, local currency and inflation-indexed debt. The choice of debt currency denomination balances hedging benefits and costs implied by each type of bond. On one hand, the exchange rate features a negative correlation with tradable endowment, making local currency and indexed debt useful securities in terms of hedging. On the other hand, the government is tempted to use inflation surprises (local currency debt) and real exchange rate depreciation surprises (local currency and indexed debt) to dilute the value of its debt. Foreign currency debt acts as a commitment device, because its value cannot be diluted. I derive analytical expressions to gain insight into the nature of these trade-offs and solve the model numerically to explain the difference in currency composition across countries. Large external debt-to-GDP ratios, long debt duration, and low inflation costs encourage more borrowing in inflation-indexed bonds and can explain the larger share of inflation-indexed debt in Uruguay compared to other Latin American countries.

Work in progress

Sovereign Defaults, Policy Sequencing, and Debt Market Pricing

with Daniel Hernaiz and John Jairo Leon Diaz

High-Frequency MPCs and the Transmission of Monetary Policy

with Aditi Singh

Optimal Monetary and Fiscal Policy under Commitment: The Role of Maturity Structure and Currency Denomination of Government Bonds

Thesis chapter, 2023

Publications

Macroeconomics

  1. Economic Growth and Development Gaps in Uruguay, with D. Hernaiz, V. Queijo and P. Regueira, supervised by E. Borensztein. IDB Dialogue Note, prepared as part of the Strategy with Uruguay 2015–2020.
  2. Assessing Different Methodologies for the Estimation of Uruguay's Structural Fiscal Balance, with A. Rasteletti. IDB Technical Note IDB-TN-598.
  3. Policy brief: Fiscal Space and Pro-Growth Policy Coordination in the MERCOSUR, with D. Aboal. CINVE, Red Mercosur de Investigaciones Económicas.

Tourism and growth

  1. Testing the Dynamic Relationship Among CO2 Emissions, Economic Growth, Energy Consumption and Tourism Development: Evidence for Uruguay, with J. G. Brida and B. Lanzilotta. In Balsalobre-Lorente D., Driha O. M., Shahbaz M. (Eds.), Sustainable Tourism, Economic Growth and Clean Energy Strategies. Springer, Cham.
  2. The impacts of tourism in economic growth and development in Uruguay, with J. G. Brida, B. Lanzilotta and M. Rodríguez Brindis. In Monterrubio C., Andriotis K. & Stylidis D. (Eds.), pp. 138–155. CABI Regional Tourism Series, CABI, Wallingford, UK.
  3. The non-linear relationship between air transport development and economic growth: the cases of Chile and Uruguay, with J. G. Brida and B. Lanzilotta. World Review of Intermodal Transportation Research, 8(4), 320–337.
  4. Testing the dynamic relationship among CO2 emissions, economic growth, energy consumption and tourism development: Evidence for Uruguay, with J. G. Brida and B. Lanzilotta. In Ecological Economics and Social-Ecological Movements, pp. 89–104.
  5. Dynamic relationship between tourism and economic growth in MERCOSUR countries: A nonlinear approach based on asymmetric time series models, with J. G. Brida and B. Lanzilotta. Economics Bulletin, 36(2), 879–894.
  6. A nonlinear approach to the tourism-led growth hypothesis: the case of the MERCOSUR, with J. G. Brida, B. Lanzilotta and J. S. Pereyra. Current Issues in Tourism.
  7. The tourism-led growth hypothesis: a comparative study for the MERCOSUR countries, with J. G. Brida, B. Lanzilotta and J. S. Pereyra. Revista de Economía Mundial. Presented at the Advanced Research Workshop in Tourism Economics (ARWTE) 2012 and at the XXVII Annual Economic Meeting of the Central Bank of Uruguay.

Unpublished documents

  1. Dynamics of Public Debt and Economic Growth in Uruguay, with F. Pietrafesa, V. Queijo and O. Valencia. In D. Hernaiz Diez de Medina, F. Rodrigues Bastos and A. Schijman (Eds.), Balance and Advance: Tax Reforms in the Southern Cone. IDB.
  2. Departmental Competitiveness Indicators, with D. Aboal, B. Lanzilotta and R. Osimani. CINVE and Office of Planning and Budget of Uruguay, financed by the IDB.
  3. Non-bank financing sources to the private sector, with G. Carlomagno, B. Lanzilotta and G. Zunino. Technical Studies of Monetary Component, Credit and Interest Rates. CINVE and DOMINUS.
  4. Credit to private sector by company size, with G. Carlomagno, B. Lanzilotta and G. Zunino. Technical Studies of Monetary Component, Credit and Interest Rates. CINVE and DOMINUS.
  5. Law of One Price in the Beef Market, with S. Prieto. Presented at the XXV Annual Economic Meeting of the Central Bank of Uruguay.

Selected presentations

2026
Hamilton – Colgate Economics Conference
2025
Hamilton College Brown Bag
2024
XXXIX Annual Economic Conference of the Central Bank of Uruguay; I International Conference of the Georgian Economic Association; Union College Economics Seminar
2021
I Annual Economic Conference of the Central Bank of Paraguay (video)
2020
Montevideo Graduate Workshop, 2nd edition, Universidad Católica del Uruguay and Sociedad de Economistas del Uruguay; Economic Dynamics Research Group (GIDE) Seminar, Universidad de la República
2018–2023
Macroeconomics Student Seminar, University of Virginia
2012
XXVII Annual Economic Meeting of the Central Bank of Uruguay

Discussions

2025
"Fiscal Inflation with Incomplete Information" by Abhiprerna Smit. Shiv Nadar University Fourth Macroeconomics Conference.
2024
"Exploring Monetary Policy with Imperfect Credibility: The Case of Uruguay" by Patricia Carballo. XXXIX Annual Economic Conference of the Central Bank of Uruguay.

IDB: Inter-American Development Bank. CINVE: Center for Economic Research.