Roc Armenter : Research

with Viktoria Hnatkovska.

The U.S. non-financial corporate sector became a net lender vis-a-vis the rest of the economy in the early 2000s. We document this fact in the aggregate and firm-level data. We then develop a structural dynamic model with investment to study the firms' financing decisions. Debt is fiscally advantageous but subject to a no-default borrowing constraint. Equity allows the firm to suspend distributions to shareholders when the cash flow is negative.

with Thomas Mertens.

Insurance schemes rely on legal action to deter fraudulent claims. We capture this aspect by introducing a random state verification technology in a dynamic economy with private information. With some probability, an agent's skill level becomes known, allowing to punish misreporting agents. We demonstrate how deferring consumption can ease the provision of incentives. As a result, the marginal benefit of investment can be below its marginal cost, which suggests subsidizing savings.

Review of Economic Dynamics, 13(2), pp.403-423, 2010. With Francesc Ortega.

We ask whether worker mobility has undermined the ability of U.S. states to redistribute income. We build a tractable model where both migration decisions and redistribution policies are jointly determined. Our model features a large number of heterogeneous regions and skilled and unskilled workers with idiosyncratic migration costs.

European Economic Review, forthcoming. With Francesc Ortega.

We analyze the joint determination of income redistribution and migration flows across fiscally independent regions. In our model, regional governments lack commitment so their policy announcements must be credible, and redistribution between skilled and unskilled workers is bounded by informational constraints.

Review of Economic Studies, forthcoming. With Stefania Albanesi.

with Stefania Albanesi.

Most Ramsey models prescribe that capital taxes should be zero in the long run (Chamley 1986, Judd 1985). We propose a new argument for Chamley-Judd result that relies on the government's ability to reallocate distortions over time. Our argument translates into the following principle: if it is possible for the government to front-load all distortions, there will be no permanent intertemporal wedge. The principle is very general and applies to a very large class of Ramsey models.

Journal of Public Economics, 92 (10-11), pp. 2275-2281. 2008.

Review of Economic Dynamics, 10(1), pp. 31-54. 2007.