Alberto Ramirez de Aguilar

Alberto Ramirez de Aguilar
Job Market Paper

Debt, Inflation, and Government Reputation

This paper develops a theoretical framework to explain the correlation between public debt and inflation through different episodes, focusing on the role of government reputation (defined as the public's belief in the government's commitment to low inflation) in shaping inflation expectations. I propose a dynamic game model with incomplete information where private agents (wage setters) and a consolidated government (a player taking fiscal and monetary policy decisions) interact over time. The government's type is private information, and wage setters learn the type of the government through the observed history of implemented policies. The government can be either prudent, prioritizing low inflation, or imprudent, favoring short-term output and debt gains through higher inflation. Wage setters form inflation expectations based on the government's debt trajectory and its perceived reputation. The model implies a monotonic relationship between inflation and reputation, in the sense that higher government reputation implies lower inflation. In addition, as the government's reputation increases, the incidence of the current debt state on inflation is reduced. Hence, when reputation is strong, a government can sustain low inflation even with high debt. I calibrate the model using data from four emerging markets (Mexico, Colombia, Guatemala, and Thailand), illustrating how government reputation influences inflation dynamics. The findings underscore the importance of maintaining low inflation as debt rises to build and preserve government credibility while also providing insights into the periods of high correlation between debt and inflation observed in these economies.

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Other Research
Teaching Experience

University of Pennsylvania

Spring, 2024        Introduction to Macroeconomics, Undergraduate, Main Instructor

Fall, 2023              Introduction to Microeconomics, Undergraduate, Teaching Assistant

Summer, 2023    Math Camp, Ph.D. Course, Main Instructor

Spring, 2023        Game Theory and Applications, Ph.D. Course, Teaching Assistant

Fall, 2022              Microeconomic Theory I, Ph.D. Course, Teaching Assistant

Summer, 2022    Math Camp, Ph.D. Course, Main Instructor

Spring, 2022       Microeconomic Theory II, Ph.D. Course, Teaching Assistant

Fall, 2021             Macroeconomic Theory I, Ph.D. Course, Teaching Assistant

Summer, 2021   Math Camp, Ph.D. Course, Main Instructor

Spring, 2021       Introductory Macroeconomics, Undergraduate, Teaching Assistant 

Fall, 2020             Macroeconomic Theory I, Ph.D. Course, Teaching Assistant

 

Instituto Tecnologico Autonomo de Mexico

Summer, 2024    Advanced Macroeconomics, Undergraduate, Main Instructor

Summer, 2023    Advanced Macroeconomics, Undergraduate, Main Instructor

Summer, 2022    Advanced Macroeconomics, Undergraduate, Main Instructor

Summer, 2021    Advanced Macroeconomics, Undergraduate, Main Instructor

Fall, 2020           Intermediate Microeconomics, Undergraduate, Main Instructor

Summer, 2020    Advanced Macroeconomics, Undergraduate, Main Instructor

Spring, 2019       Intermediate Microeconomics, Undergraduate, Main Instructor

Fall, 2018           Intermediate Microeconomics, Undergraduate, Main Instructor

Spring, 2018       Intermediate Microeconomics, Undergraduate, Main Instructor

Other Information

Other Working Papers

Fiscal Policy and Inflation: Understanding the Role of Expectations in Mexico with Bernabe Lopez-Martin and Daniel Samano, Inter-American Development Bank Working Papers, 2018

Interests

Macroeconomic Theory, Fiscal and Monetary Policy

Address

133 South 36th Street, Office 635

Phone

267-466-8222

Email

arawille@sas.upenn.edu

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Advisors

Harold L. Cole

References

Harold L. Cole

Advisor

Department of Economics

University of Pennsylvania

133 S. 36th Street

Philadelphia, PA 19104

colehl@econ.upenn.edu

+1 (215) 898 7788

 

George J. Mailath

Committee Member

Department of Economics

University of Pennsylvania

133 S. 36th Street

Philadelphia, PA 19104

gmailath@sas.upenn.edu

+1 (215) 898 7908

 

Alessandro Dovis

Committee Member

Department of Economics

University of Pennsylvania

133 S. 36th Street

Philadelphia, PA 19104

adovis@upenn.edu

+1 (215) 898 5421

 

Diego Dominguez Larrea

Teaching Reference

Department of Economics

Instituto Tecnologico Autónomo de Mexico

Rio Hondo 1

Mexico City, Mexico, 01080

diego.dominguez@itam.mx

+ 52 (55) 1728 6049

Job Market Candidate Status
Active