### About Me

## Hi! I am a Postdoctoral Researcher at **University of Tübingen**. I have a PhD in Economics from **CEMFI**.

## My research focuses on **macroeconomics**, **econometrics**, and **household dynamics**.

### Research

**Income Risk, Unpredicted Expenses, and Transitions Toward Zero-Wealth** - new draft coming soon!

This paper investigates the empirical and theoretical roles of income and expenditure risk in explaining household wealth dynamics. Despite economic theory emphasizing precautionary savings, approximately 22\% of U.S. households hold zero or negative wealth, exposing themselves to consumption fluctuations. Using data from the Panel Study of Income Dynamics (PSID), I develop an econometric framework to independently identify expenditure risk from income risk. The findings show that both risks significantly affect wealth dynamics, with permanent income shocks leading to persistent depletion of family wealth and transitions to non-positive net worth positions. Expenditure risk, modeled as shocks to the marginal utility of a fraction of the household consumption basket, creates a wedge in the optimal intertemporal condition for consumption growth and savings dynamics. This negatively affects the household’s ability to adjust expenditure when facing negative permanent income shocks. The study contributes to the literature on consumption inequality and the spending behavior of low-wealth households by refining empirical approaches and incorporating a flexible non-parametric consumption model. The results highlight the critical role of expenditure risk in financial vulnerability and suggest that it should be considered in models of household wealth transitions.

**Saving for a Sunny Day: An Alternative Theory of Precautionary Savings**

(with S. Chatterjee, D. Corbae, K. Dempsey, and J.V. Rios-Rull)

We pose a new rationale for precautionary savings based on type one extreme value preference shocks. In this framework, the errors of the Euler equation that predicts consumption based on observables has the same properties as the data: the log errors are an affine increasing function of cash in hand. This is not the case with the more standard shocks to the marginal utility of consumption. We characterize the solution to the households’ problem showing how the familiar formulas from static and discrete settings adapt to dynamic and continuous environments. We also show how the existence of these shocks provides utility-enhancing consumption opportunities that justify additional savings beyond those generated by environments with shocks to earnings, something that does not happen with standard shocks to marginal utility. The properties of the Euler equation errors allows us to estimate jointly risk aversion and the variance of the preference shocks.