Maurício Barbosa-Alves

This paper examines how climate change will affect food prices across regions and people across the income distribution, emphasizing the uneven effects on agricultural productivity. As climate change shifts comparative advantages in food production, trade frictions limit adaptive sourcing. These frictions induce local sourcing, making food prices dependent on local productivity and increasing prices everywhere. Low-income households, with higher food expenditure shares, are particularly vulnerable to local food price increases. We develop a spatial macro trade model that incorporates income heterogeneity and two types of food goods with different trade frictions, allowing us to decompose welfare losses stemming from climate change into food expenditure shares, trade shares, and productivity changes. Using Brazilian data, we estimate intra-national trade shares using short-term weather shocks, price changes, and driving times between states. We find that trade frictions for fresh food are twice as sensitive to driving time relative to commodities, which face lower trade costs. Counterfactuals based on productivity forecasts indicate substantial welfare losses, with the lowest income decile in the most affected states willing to forgo 3% of income to avoid projected productivity declines. Improving road infrastructure could mitigate these effects, with low-income households in some states willing to pay up to 0.8% of their income for a 10% increase in the average driving speed.

This paper studies the impact of climate change on international migration. Using census data from Guatemala, we document novel evidence suggesting that areas affected by elevated temperatures exhibit less migration in the following year. The magnitude is larger in rural areas. We postulate that in the short run, years with higher-than-usual temperatures reduce rural productivity, decreasing migration from credit-constrained workers who need to pay migration costs. In this context, climate change’s effects are two-sided. While declining rural productivity makes migration more appealing, it also makes it increasingly difficult to pay the migration cost. We build a dynamic incomplete-markets migration model with credit-constrained workers and migration costs where elevated temperatures affect rural productivity. We estimate the effect of elevated temperatures on crop yields and then estimate the model to match the temperature-migration link we document. We project rural productivity for different climate change scenarios. We show that migration slowly increases for all scenarios as low-income workers need to start saving to migrate. Additionally, we find that transfers providing insurance against elevated temperatures reduce migration under all scenarios. Counterintuitively, although the weather-contingent transfers help pay the migration cost, its insurance effect makes staying more appealing.

We study the long-run impact of macroprudential policies in a dynamic general equilibrium model with endogenous productivity growth and an endogenous balance sheet structure. Banks choose liabilities depending on their risk perceptions, and pecuniary externalities create a feedback mechanism between banking and entrepreneurial activity that amplifies the financial accelerator. Macroprudential tools can dampen this mechanism, and we uncover a non-monotonic relationship between long-run growth and the intensity of macroprudential rules. In particular, by performing a welfare analysis, we show that a benevolent regulator faces a trade-off between growth and risk.

A remarkable observation across Emerging Markets (EMs) in the past two decades is the shift in the currency denomination of its external sovereign debt - from foreign currency (FC) to local currency (LC). This paper first documents and then exploits cross-country variation in the real output correlation with US dollar inflation to explain the heterogeneity of EMs’ sovereign external debt currency composition. I provide evidence that countries where real income positively correlates with dollar inflation face high and volatile spreads in dollar-denominated debt. In addition, these countries have a higher share of outstanding LC sovereign debt held by foreigners, and for which this share has increased the most since 2009. Next, I furnish a sovereign default model to rationalize these salient data patterns. A positive correlation between the dollar inflation and EM’s real income increases the variance of ex-post available resources, increasing the probability of default ex-post, rendering debt more costly, and jeopardizing consumption smoothing. Lastly, I lay out an extension with nominal frictions and LC debt to highlight the sovereign’s main trade-offs, shedding light on incentive problems related to Time Inconsistency. I articulate that the simple model is a particular case of the extended model.