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Cavallo, Eduardo A.

Overview
Works: 52 works in 129 publications in 2 languages and 383 library holdings
Roles: Author, Editor
Classifications: HB1, 330
Publication Timeline
Key
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 )
14 editions published between 2004 and 2007 in English and held by 38 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
The determinants of corporate risk in emerging markets : an option-adjusted spread analysis by Eduardo A Cavallo( Book )
11 editions published in 2007 in English and Undetermined and held by 15 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 12 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
Exchange rate policy and liability dollarization : an empirical study by Pelin Berkmen( Book )
8 editions published in 2007 in English and held by 12 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
Prices and supply disruptions during natural disasters by Alberto F Cavallo( Book )
5 editions published in 2013 in English and held by 5 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
Living as a debtor in a world of sudden stops : the roles of exposure to trade and commitment by Eduardo A Cavallo( Archival Material )
2 editions published in 2006 in English and held by 4 libraries worldwide
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 4 libraries worldwide
Precautionary strategies and household saving by Joshua Aizenman( Book )
6 editions published in 2015 in English and held by 4 libraries worldwide
Why do people save? A strand of the literature has emphasized the role of 'precautionary' motives; i.e., private agents save in order to mitigate unexpected future income shocks. An implication is that in countries faced with more macroeconomic volatility and risk, private saving should be higher. From the observable data, however, we find a negative correlation between risk and private saving in cross-country comparisons, particularly in developing countries. We provide a plausible explanation for the disconnect between precautionary-saving theory and the empirical evidence that is based on a model with a richer account for the various modes of 'precautionary' behavior by private agents, in cases where institutions are weaker and labor informality is prevalent. In such environments, household saving decisions are intertwined with firms' investment decisions. As a result, the interaction between saving behavior, broadly construed, and aggregate risk and uncertainty, may be more complex than is frequently assumed
Does openness to trade make countries more vulnerable to sudden stops, or less? : Using gravity to establish causality ( Computer File )
2 editions published between 2004 and 2007 in English and held by 3 libraries worldwide
Openness to trade is one factor that has been identified as determining whether a country is prone to sudden stops in capital inflows, crashes in currencies, 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. Using the gravity instrument for trade openness, which is constructed from geographical determinants of bilateral trade, this paper finds 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. -- 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
Debt sustainability under catastrophic risk: the case for government budget insurance by Eduardo A Cavallo( Book )
4 editions published in 2008 in English and Undetermined and held by 3 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
Output volatility and openness to trade : a reassessment by Eduardo A Cavallo( Computer File )
3 editions published in 2007 in English and held by 3 libraries worldwide
Many economists believe that, while openness to trade increases average GDP growth rates, it also raises output volatility by exposing countries to terms-oftrade shocks. This view does not take into account that, as suggested by a recent strand of the financial fragility literature, commercial trade might also reduce financially related volatility. Once this is taken into account, the relationship between exposure to trade and output volatility is still an open question. Trade therefore is not necessarily a destabilizing force in countries that are exposed to volatile capital flows. This paper presents new empirical evidence that suggests 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. -- openness to trade ; output volatility ; financial crises ; gravity equation
Foreign aid in the aftermath of large natural disasters by Oscar Becerra( file )
2 editions published in 2012 in English and held by 3 libraries worldwide
The welfare gains from macro-insurance against natural disasters by Eduardo Borensztein( Book )
6 editions published in 2015 in English and held by 3 libraries worldwide
This paper uses a dynamic optimization model to estimate the welfare gains that a small open economy can derive from insuring against natural disasters with catastrophe (CAT) bonds. We calibrate the model by reference to the risk of earthquakes, floods and storms in developing countries. We find that the countries most vulnerable to these risks would find it optimal to use CAT bonds for insurance only if the cost of issuing these bonds were significantly smaller than it is in the data. The welfare gains from CAT bonds range from small to substantial depending on how insurance affects the country's external borrowing constraint. The option of using CAT bonds may bring a welfare gain of several percentage points of annual consumption by improving external debt sustainability. These large gains disappear if the country can opportunistically default on its external debt
The economics of natural disasters a survey by Eduardo A Cavallo( file )
3 editions published between 2009 and 2010 in English and held by 3 libraries worldwide
Catastrophes caused by natural disasters are by no means new, yet the evolving understanding of their relevance to economic development and growth is still in its infancy. In order to facilitate further necessary research on this topic, this paper summarizes the state of the economic literature examining the aggregate impact of disasters. The paper reviews the main disaster data sources available, discusses the determinants of the direct effects of disasters, and distinguishes between short- and long-run indirect effects. The paper then examines some of the relevant policy questions and follows up with projections about the likelihood of future disasters, while paying particular attention to climate change. The paper ends by identifying several significant gaps in the literature
Trade, gravity and sudden stops : on how commercial trade can increase the stability of capital flows by Eduardo A Cavallo( Computer File )
3 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
Where is the money? post-disaster foreign aid flows by Oscar Becerra( Book )
3 editions published in 2013 in English and held by 2 libraries worldwide
The politics of financial development : the role of interest groups and government capabilities by Oscar Becerra( Computer File )
2 editions published in 2010 in English and held by 2 libraries worldwide
Although financial development is good for long-term growth, not all countries pursue policies that render full financial development. This paper builds on an extensive political economy literature to construct a theoretical model showing that the intensity of opposition to financial development by incumbents depends on both their degree of credit dependency and the role of governments in credit markets. Empirical evidence for this claim is provided, and the results suggest that lower opposition to financial development leads to an effective increase in credit markets' development only in those countries that have high government capabilities. Moreover, improvements in government capabilities have a significant impact on credit market development only in those countries where credit dependency is high (thus, opposition is low). This paper therefore contributes to this rich literature by providing a unified account of credit market development that includes two of its main determinants, traditionally considered in isolation
Estimating the direct economic damage of the earthquake in Haiti by Eduardo A Cavallo( file )
3 editions published in 2010 in English and held by 2 libraries worldwide
This paper uses simple regression techniques to make an initial 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 dead and 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
The Determinants of Corporate Risk in Emerging Markets by Eduardo A Cavallo( file )
2 editions published in 2007 in English and held by 0 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
 
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Alternative Names
Cavallo, E. A.
Cavallo, Eduardo
Cavallo, Eduardo Alfredo
Languages
English (89)
Spanish (1)
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