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Essays in International Macro-Finance and Monetary Economics

PhD Supervisors: Cédric Tille and Beatrice Weder di Mauro 
Funding Organisation: Swiss National Science Foundation, Doc.CH scheme
Timeline: September 2022–August 2025
Budget: CHF 188,802
Keywords: financial crises, financial frictions, liquidity trap, macroprudential theory, regulatory arbitrage


The Global Financial Crisis (GFC) of 2007–2009 was a watershed, showing a serious lack of knowledge in the macro-financial issues. For the last decade, identifying the possible channels between macro and finance and designing welfare-improving macroeconomic and financial regulatory policies have been on top of a research agenda in the field of macroeconomics and macro-finance. The three chapters of my dissertation belong to this new strand of literature in International Macro-Finance and Monetary Economics. 


The dissertation will address the critical post-GFC questions, particularly, avoiding regulatory arbitrage and liquidity trap, which still remain unanswered.

In Chapter 1 I aim to analyse the importance of regulation circumvention for macro-financial stability reasons by building a theoretical general equilibrium model. Using a novel feature allowing endogenous creation of non-regulated agents in the economy, I compare two policy regimes of macroprudential regulation, policy under (i) commitment and (ii) discretion. I propose the channel through which policy under commitment leads to larger regulatory leakages.

Chapter 2 sheds light on the interaction between the nominal and financial frictions, and identifies the optimal setting of monetary and macroprudential policies in a non-linear macroeconomic model with a partially regulated financial system. I will contribute to the academic debate by analysing whether ex-ante or ex-post tools should be used to prevent and/or mitigate the consequences of a financial crisis. Decades of academic research related to monetary economics provided a strong basis for monetary policy. However, currently, macroprudential theory is in its infancy stage, while macroprudential policy is ahead of macroprudential theory, posing threats of possible disastrous mistakes.

The two above-mentioned chapters will contribute to filling the gap between academic research and policy, thus providing valuable information to both academic- and policy-world.

For Chapter 3, I turn to the issue of foreign exchange interventions, which presents one of the most intensively used instruments in the emerging markets. I empirically study a panel of emerging markets to explore whether FXI is able to reduce the probability and severity of a sudden stop, and if so, what are the channels at work. I show that (i) FX reserve accumulation during episodes of capital inflow surges is able to reduce the probability and severity of a subsequent sudden stop – revealing the ex-ante role of FXI and (ii) decumulation of FX reserves during a sudden stop reduces the severity of a recession and supports the recovery of output – illustrating the ex-post role. The macroeconomic effect of FXI thus includes a macroprudential element and goes well-beyond the exchange rate. The results suggest that FX interventions have the ability to “get in all the cracks” of the economy and central banks should complement macroprudential measures with FXI when effectiveness of the former is constrained or subject to regulatory leakage.


This thesis makes important theoretical and empirical contributions to the field of international macro-finance and monetary economics, using cutting-edge non-linear models as well as sophisticated model-solution and estimation techniques.