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Cavallo, Eduardo A.

Overview
Works: 46 works in 95 publications in 2 languages and 247 library holdings
Roles: Editor
Classifications: HB1, 338.91091724
Publication Timeline
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Publications about Eduardo A Cavallo
Publications by Eduardo A Cavallo
Most widely held works by Eduardo A Cavallo
Does openness to trade make countries more vulnerable to sudden stops, or less? : using gravity to establish causality by Jeffrey A Frankel( Book )
13 editions published between 2004 and 2007 in English and held by 73 libraries worldwide
"Openness to trade is one factor that has been identified as determining whether a country is prone to sudden stops in capital inflow, currency crashes, or severe recessions. Some believe that openness raises vulnerability to foreign shocks, while others believe that it makes adjustment to crises less painful. Several authors have offered empirical evidence that having a large tradable sector reduces the contraction necessary to adjust to a given cut-off in funding. This would help explain lower vulnerability to crises in Asia than in Latin America. Such studies may, however, be subject to the problem that trade is endogenous. We use the gravity instrument for trade openness, which is constructed from geographical determinants of bilateral trade. We find that openness indeed makes countries less vulnerable, both to severe sudden stops and currency crashes, and that the relationship is even stronger when correcting for the endogeneity of trade"--National Bureau of Economic Research web site
Exchange rate policy and liability dollarization : an empirical study by Pelin Berkmen( file )
7 editions published in 2007 in English and held by 29 libraries worldwide
The paper identifies the contemporaneous relationship between the exchange rate policy and external debt dollarization in a panel of industrial and developing countries. The presence of endogeneity makes the task of empirical identification elusive. The paper uses the method of "identification through heteroskedasticity" developed by Rigobon (2003) to solve the problem of identification in the present context. It finds that, controlling for endogeneity, countries with aggregate liability dollarization tend to be more actively involved in exchange rate stabilization operations, but it finds mixed results for the reverse causality
The determinants of corporate risk in emerging markets an option-adjusted spread analysis by Eduardo A Cavallo( Computer File )
9 editions published in 2007 in English and held by 28 libraries worldwide
This study explores the determinants of corporate bond spreads in emerging markets economies. Using a largely unexploited dataset, the paper finds that corporate bond spreads are determined by firm-specific variables, bond characteristics, macroeconomic conditions, sovereign risk, and global factors. A variance decomposition analysis shows that firm-level characteristics account for the larger share of the variance. In addition, the paper finds two asymmetries. The first is in line with the sovereign ceiling "lite" hypothesis which states that the transfer of risk from the sovereign to the private sector is less than 1 to 1. The second is consistent with the popular notion that panics are common in emerging markets where investors are less informed and more prone to herding
Debt sustainability under catastrophic risk : the case for government budget insurance by Eduardo Borensztein( Book )
9 editions published between 2007 and 2008 in English and held by 28 libraries worldwide
Natural disasters are an important source of vulpnerability in the Caribbean region. Despite being one of the more disaster-prone areas of the world, it has one of the lowest levels of insurance coverage. This paper examines the vulnerability of Belize's public finance to the occurrence of hurricanes and the potential impact of insurance instruments in reducing that vulnerability. The paper finds that catastrophic risk insurance significantly improves Belize's debt sustainability. In addition, the methodology employed makes it possible to estimate the appropriate level of insurance, which for the case of Belize is a maximum coverage of US$120 million per year
Prices and supply disruptions during natural disasters by Alberto F Cavallo( Computer File )
3 editions published in 2013 in English and held by 12 libraries worldwide
We study the daily behavior of supermarket prices and product availability following two recent natural disasters: the 2010 earthquake in Chile and the 2011 earthquake in Japan. In both cases there was an immediate and persistent effect on product availability. The number of goods available for sale fell 32% in Chile and 17% in Japan from the day of the disaster to its lowest point, which occurred 61 and 18 days after the earthquakes, respectively. Product availability recovered slowly, and a significant share of goods remained out of stock after six months. By contrast, prices were stable for months, even for goods that were experiencing severe shortages. These trends are present at all levels of aggregation, but there is heterogeneity across categories. We further look at the frequency and magnitudes of price changes in both countries and find that the results in Chile are consistent with pricing models where retailers have fear of "customer anger". In Japan the evidence suggests a bigger role for supply disruptions that restricted the ability of retailers to re-stock goods after the earthquake
Debt Sustainability under Catastrophic Risk by Eduardo A Cavallo( file )
2 editions published in 2008 in English and held by 9 libraries worldwide
Natural disasters are an important source of vulnerability in the Caribbean region. Despite being one of the more disaster-prone areas of the world, it has one of the lowest levels of insurance coverage. This paper examines the vulnerability of Belize's public finance to the occurrence of hurricanes and the potential impact of insurance instruments in reducing that vulnerability. The paper finds that catastrophic risk insurance significantly improves Belize's debt sustainability. In addition, the methodology employed makes it possible to estimate the appropriate level of insurance, which for t
The Determinants of Corporate Risk in Emerging Markets by Eduardo A Cavallo( file )
1 edition published in 2007 in English and held by 7 libraries worldwide
This study explores the determinants of corporate bond spreads in emerging markets economies. Using a largely unexploited dataset, the paper finds that corporate bond spreads are determined by firm-specific variables, bond characteristics, macroeconomic conditions, sovereign risk, and global factors. A variance decomposition analysis shows that firm-level characteristics account for the larger share of the variance. In addition, the paper finds two asymmetries. The first is in line with the sovereign ceiling ""lite"" hypothesis which states that the transfer of risk from the sovereign to the p
Where is the money? Post-disaster foreign aid flows by Oscar Becerra( file )
2 editions published in 2013 in English and held by 4 libraries worldwide
Living as a debtor in a world of sudden stops : the roles of exposure to trade and commitment by Eduardo A Cavallo( Book )
2 editions published in 2006 in English and held by 3 libraries worldwide
Trade, gravity and sudden stops : on how commercial trade can increase the stability of capital flows ( Computer File )
2 editions published between 2005 and 2006 in English and held by 3 libraries worldwide
Financial stability is an important policy objective, since crises are associated with large economic, social and political costs. Promoting stability requires preventing "sudden stops" in capital flows, which are events in which foreign financing abruptly disappears. This paper contributes to the discussion by providing new theoretical and empirical evidence on the causal connection between lack of exposure to commercial trade and proclivity to sudden stops. On the theoretical front, the paper shows how exposure to trade raises the creditworthiness of countries and reduces the probability of sudden stops. In relatively closed economies, sudden stops (when they occur) are more harmful and thus the option to default on the inherited debt is more attractive. Therefore, conditional on the amount that lenders are willing to loan, decreased exposure to trade increases the likelihood of default. A sudden stop takes place when the borrowers reject the amount that lenders want to loan: they receive no new funding and they concurrently default on the outstanding debt to "ease the pain". This proposition is tested using "gravity estimates", which are based on countries' geographic characteristics, as appropriate instruments for trade. The results indicate that, all else equal, a 10 percentage point decrease in the trade to GDP ratio increases the probability of a sudden stop between 30 percent and 40 percent. The policy implications are unambiguous: increasing the tradable component of a country's GDP will, ceteris paribus, reduce the vulnerability of that country to sudden stops in capital flows. -- Sudden Stops ; Current Account Adjustment ; Trade ; Gravity Model
All that glitters may not be gold : assessing Latin America's recent macroeconomic performance ( Book )
1 edition published in 2008 in English and held by 3 libraries worldwide
Public investment in developing countries a blessing or a curse? by Eduardo A Cavallo( Computer File )
2 editions published in 2008 in English and held by 3 libraries worldwide
This paper analyzes the impact of public investment on private investment in 116 developing countries between 1980 and 2006. It finds a strong crowding-out effect that seems to be the norm rather than the exception, both across regions and over time. This effect is dampened (or even reversed) in countries with better institutions that are more open to international trade and financial flows. These results confirm that while public infrastructure may complement private capital, distortions associated with the public investment process might crowd out private investment in the course of building public capital stocks. These distortions are more prevalent in countries with weak institutions or closed economies
Dealing with an international credit cruch : policy responses to sudden stops in Latin America by Eduardo A Cavallo( Book )
3 editions published in 2009 in English and Spanish and held by 3 libraries worldwide
Estimating the direct economic damage of the earthquake in Haiti by Eduardo A Cavallo( file )
2 editions published in 2010 in English and held by 3 libraries worldwide
Abstract : This paper uses simple regression techniques to make a first assessment of the monetary damages caused by the January 12, 2010 earthquake that struck Haiti. Damages are estimated for a disaster with both 200,000 and 250,000 total deaths plus missing (i.e., the range of mortality that the earthquake is estimated to have caused) using Haiti's economic and demographic data. The base estimate is US$8.1bn for a death toll of 250,000, but for several reasons this may be a lower bound estimate. An estimate of US$13.9bn for the same death toll is within statistical error. While the results are subject to many caveats, the implications of such an estimate are significant. Raising such a figure will require many donors--bilateral, multilateral and private. Hence excellent coordination of funding and execution will be the key to ensuring the efficient use of funds
Are crises good for long-term growth? the role of political institutions by Alberto F Cavallo( Computer File )
2 editions published in 2008 in English and held by 2 libraries worldwide
This paper provides empirical evidence for the importance of institutions in determining the outcome of crises on long-term growth. Once unobserved country-specific effects and other sources of endogeneity are accounted for, political institutions affect growth through their interaction with crises. The results suggest that only countries with strong democracies, high levels of political competition and external constraints on government can potentially benefit from crises and use them as opportunities to enhance long-term output per capita and productivity growth
Financial development and TFP growth : cross-country and industry-level evidence by Francisco Arizala( Computer File )
1 edition published in 2009 in English and held by 2 libraries worldwide
This paper estimates the impact of financial development on industry-level total factor productivity (TFP) growth using a largely unexploited panel of 77 countries with data for 26 manufacturing industries for the years 1963 to 2003. A significant relationship is found between financial development and industry-level TFP growth when controlling for country-time and industry-time fixed effects. The results are both statistically and economically significant. TFP growth can accelerate up to 0.6 percent per year, depending on the external finance requirement of industries, following a one standard deviation increase in financial development. The results are robust to different samples and specifications. -- Financial development ; TFP growth ; Volatility
Catastrophic natural disasters and economic growth ( file )
2 editions published in 2010 in English and held by 2 libraries worldwide
This paper examines the short and long-run average causal impact of catastrophic natural disasters on economic growth by combining information from comparative case studies. The counterfactual of the cases studied is assessed by constructing synthetic control groups, taking advantage of the fact that the timing of large sudden natural disasters is an exogenous event. It is found that only extremely large disasters have a negative effect on output, both in the short and long run. However, this result appears in two events where radical political revolutions followed the natural disasters. Once these political changes are controlled for, even extremely large disasters do not display any significant effect on economic growth. It is also found that smaller, but still very large natural disasters, have no discernible effect on output
Do credit rating agencies add value? : Evidence from the sovereign rating business institutions ( Computer File )
1 edition published in 2008 in English and held by 2 libraries worldwide
If rating agencies add no new information to markets, their actions are not a public policy concern. But as rating changes may be anticipated, testing whether ratings add value is not straightforward. This paper argues that ratings and spreads are both noisy signals of fundamentals and suggest ratings add value if, controlling for spreads, they help explain other variables. The paper additionally analyzes the different actions (ratings and outlooks) of the three leading agencies for sovereign debt, also considering the differing effects of more or less anticipated events. The results are consistent across a wide range of tests. Ratings do matter and hence how the market for ratings functions may be a public policy concern. -- Ratings ; Spreads ; Information Economics ; Event Studies
Output volatility and openness to trade a reassessment by Eduardo A Cavallo( Computer File )
2 editions published in 2007 in English and held by 2 libraries worldwide
This paper presents new empirical evidence suggesting that the net effect of trade openness on output volatility is stabilizing. The methodology employed seeks to correct for the likely endogeneity of trade in this setting using gravity estimates as instrumental variables. The results confirm that exposure to trade raises output volatility through the terms-of-trade channel, as previously documented in the literature, but also shows that this is counteracted by a quantitatively larger stabilizing effect. Additional evidence is presented showing that the latter effect comes (at least in part) through the financial channel. Splitting the sample into countries that are more exposed to capital flows and countries that are less exposed, the paper shows that the stabilizing effect of commercial trade predominates in the first sub-sample
The role of relative price volatility in the efficiency of investment allocation ( Computer File )
1 edition published in 2010 in English and held by 2 libraries worldwide
 
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Alternative Names
Cavallo, E. A.
Cavallo, Eduardo
Cavallo, Eduardo Alfredo
Languages
English (66)
Spanish (1)
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