Essays in Macroeconomics
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martinez-bruera-pmbruera-phd-economics-2026-thesis.pdf
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Author(s)
Martinez-Bruera, Pedro
Advisor(s)
Werning, Iván
Wolf, Christian
Date Issued
May 2026
Publisher
Massachusetts Institute of Technology
Abstract
This thesis studies three topics in macroeconomics. The first chapter studies a new dimension of the reputation of central banks. The second chapter provides a test to detect the presence of nonlinearities in the causal effect of shocks variables. Finally, the third chapter explores the consequences of dollarizing an economy when its total dollar holdings are scarce.
In the first chapter (joint with Tomás E. Caravello and Alex Carrasco), we create a framework to study a new dimension of reputation: reputation about the central bank's reaction to shocks. We show that, even when long-run inflation expectations are anchored and stable, reputation is crucial in determining the pass-through of shocks on short-run inflation expectations. We show that this mechanism is present in the US economy using private forecast data. The optimal policy treats reputation as an investment problem. In order to accumulate it, central banks need to react more aggressively than the public expects. Furthermore, central banks will build reputation when it is low, and use it when it is high.
In the second chapter (joint with Tomás E. Caravello), we develop a test to detect nonlinearities in the causal effect of shocks on macroeconomic variables. We study two types: size nonlinearities, which arise when shocks have disproportionate effects depending on their magnitude, and sign nonlinearities, which arise when positive and negative shocks have asymmetric effects. We show that augmenting a standard local projection with a nonlinear transformation of the shock allows the econometrician to test for both. Under symmetry, testing whether the coefficient on an odd transformation is zero detects size nonlinearities; an even transformation detects sign nonlinearities. Empirically, we find size but not sign nonlinearities in the effect of oil price news shocks on macroeconomic variables.
In the third chapter (joint with Tomás E. Caravello and Iván Werning), we study the effects of announcing a future dollarization when the government's pledged dollars for conversion are scarce. We show that the announcement triggers a discrete devaluation on impact, followed by a higher rate of inflation and depreciation than under the no-dollarization benchmark. When dollars are scarce but not extremely so, inflation rises over time as the conversion date nears.
JEL Codes: E52, C22, F41
MIT Department
Massachusetts Institute of Technology. Department of Economics
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