Research

My research agenda focuses on the analysis of commodity exporters, consumer habits, and the market structure of the firms.

Working Papers

  • “Decoding the Influence of Financial Constraints on Retail Product Strategies During Economic Cycles in the U.S.”, available here,
    This paper examines the adjustment margins employed by firms encountering financial constraints during the Great Recession. Specifically, the study focuses on the changes in product entry and exit and the components of sales variation. To conduct the research, I use Nielsen Homescan, GS1, and Compustat datasets, and employ panel estimation techniques. The results of the study reveal the following stylized facts: (i) firms with lower liquidity constraints, as measured by a higher ratio of liquid assets to total assets, tend to introduce new products during the Great Recession, with an average increase of approximately 1.2%; (ii) adjustments in product-specific yearly sales percentage changes are primarily driven by changes in prices, with sales remaining constant while prices increase by approximately 1% without a statistically significant shift in the customer base or quantities. These responses exhibit heterogeneity across the quality distribution, with financially constrained firms increasing prices on lower-quality products by 1.8% while reducing prices on high-quality products by approximately 7% in order to attract customers trading down and exploit locked-in customers purchasing lower-quality varieties. These findings provide insight into the role of creative destruction in
    economic activity during downturns, and shed light on the sources of changes in sales by their components.
  • “The Effects of the Pandemic on Market Power and Profitability” (with Jaime Ramirez-Cuellar), available here, presented at the 27th LACEA-LAMES Annual Meetings and the 87th MEA Annual Meetings
    We explore firm-level markup and profit rates during the COVID-19 pandemic for a panel of 3,611 publicly traded firms in Compustat and find increases for the average firm. We offer conditions to give markups and profit rate forecasts a causal interpretation of what would have happened had the pandemic not happened. Our estimations suggest that had the pandemic not happened, markups would have been 4% and 7% higher than observed in 2020 and 2021, respectively, and profit rates would have been 2.1 and 6.4 percentage points lower. We perform a battery of tests to assess the robustness of our approach. We further show significant heterogeneity in the impact of the pandemic on firms by key firm characteristics and industry. We find that firms with lower than forecasted markups tend to have lower stock-exchange tenure and fewer employees.
  • “Redistributive Effects of Oil Shocks for Commodity Exporting Economies” (with John Jairo Leon), available here,
    Commodity prices can have significant adverse distributional effects on the consumption and income of households, even in commodity-exporter economies. The discretionary income channel dominates the immediate response of consumption to changes in oil prices: a 1% increase in oil prices reduces average consumption by 0.18%, which is mainly driven by low and middle-income households. This result is partially driven by an increase in expenditure on energy-related products for all wealth quartiles (0.05% on average). Also, households not affected by their consumption see an increase in their disposable income (0.08% and 0.14%) that is seemingly used to hedge their increase in energy consumption. However, one year after the shock, consumption increased by about 0.3% across all wealth quartiles. This is consistent with a re-distributional channel driven by a pro-cyclical fiscal policy. Using an IV design, we find a 1.1% increase in government expenditure due to a 1% increase in oil-related incomes produced by the shock
  • “The Curse of the Undervalued: The effects of labor market power in Colombian manufacturing”, available here,
    This paper quantifies whether the Colombian Manufacturing sector’s labor market is characterized by employer market power. Using manufacturing data on Colombian plants, I estimate firm-specific wage markdowns, which imply average market-level wage markdowns of 28% under workers’ marginal productivity, which suggest considerable evidence of the monopsonistic competition in the market. By relying on a general equilibrium model featuring monopsonistic competition, I find that eliminating firm market power would produce an immediate 15% increase of employment, transitioning into a new perfect competition steady state where these wages and employment are 38% and 17% higher than the equilibrium under the presence of market power; I also find welfare losses of 0.3% in consumption from the presence of labor market power across steady states. However, estimates across the transition suggest a cost of 2.8% of present consumption in order to ensure the transition towards the competitive equilibrium. This implies that imposing policies such as the minimum wage or increased regulation has substantial gains for workers in the long run, but has short-term adjustment costs which result from a reallocation of profits to investment.

Publications

Working Papers (Before Ph.D.)

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