About

Mark A. Aguiar is the Walker Professor of Economics and International Finance at Princeton University. His research primarily focuses on international finance, sovereign debt, macroeconomics, and the economics of time use. Aguiar has made significant contributions to the understanding of sovereign debt crises, fiscal and monetary policy in debt-constrained economies, and international risk sharing. His work often explores the dynamics of sovereign debt, default, and the macroeconomic implications of fiscal policies, as well as the role of time allocation in economic behavior. Aguiar's research integrates theoretical models with empirical analysis, addressing issues such as inflation credibility, debt maturity, and the welfare losses from external sovereign borrowing. He has also contributed to the literature on consumption inequality, labor supply, and the macroeconomics of time allocation, reflecting a broad interest in both macroeconomic theory and applied economic questions related to public finance and international economics.

Research topics

• Political Science
• Economics
• Computer Science
• Physical therapy
• Engineering
• Medicine
• Finance
• Monetary economics
• Economic history
• History
• Law
• Microeconomics
• Demographic economics
• Labour economics

Selected publications

• Tariff Wars and Net Foreign Assets

  National Bureau of Economic Research · 2025-05-01

  reportOpen access1st authorCorresponding

  This paper examines whether and how international financial claims accumulated during a period of relatively free trade can be settled once a trade war erupts.We identify the conditions under which net claims can be honored even under balanced trade -or, in the extreme, autarky.The analysis also reveals a potential equilibrium multiplicity in which a trade war impoverishes one country while enriching its trading partner, with the identity of the winner and loser determined by a sunspot.The key adjustment mechanism is the tariff-induced shift in the terms of trade (and the corresponding real exchange rate), which revalues the relative gross asset positions to ensure that any residual trade is consistent with the inherited financial claims.

  PublisherDOI

• Tariff Wars and Net Foreign Assets

  SSRN Electronic Journal · 2025-01-01 · 4 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• How Good is International Risk Sharing? Stepping Outside the Shadow of the Welfare Theorems

  SSRN Electronic Journal · 2025-01-01

  preprintOpen access1st authorCorresponding
  PublisherDOI

• Who Are the Hand-to-Mouth?

  The Review of Economic Studies · 2024-05-23

  articleOpen access1st authorCorresponding

  Abstract Many households hold little wealth. In standard precautionary savings models, these households should not only display higher marginal propensities to consume (MPCs) but also higher future consumption growth. In contrast, we see from the Panel Study of Income Dynamics that such “hand-to-mouth” households do not display higher growth in spending. They also exhibit greater volatility of spending and adjust their spending to a greater extent through the number of categories consumed. Consistent with a role for preference heterogeneity, the panel data show that it is persistent differences across households, not current assets, that predict low consumption growth and other spending differences for the hand-to-mouth households. To identify the extent of preference heterogeneity, we consider the model of Kaplan and Violante with both liquid and illiquid assets, but allow heterogeneity in preferences. To match the data, many poor hand-to-mouth must be relatively impatient and have a high inter-temporal elasticity of substitution. The model shows that preferences predominantly explain the higher MPCs for low-asset households. Preference heterogeneity notably increases the spending impact of fiscal transfers, but only if targeted, while reducing that from interest rate cuts.

  PublisherOA PDFDOI

• Putting the "Finance" into "Public Finance": A Theory of Capital Gains Taxation

  SSRN Electronic Journal · 2024-01-01 · 3 citations

  articleOpen access1st authorCorresponding
  PublisherDOI

• Micro Risks and (Robust) Pareto-Improving Policies

  American Economic Review · 2024-10-30 · 8 citations

  article1st authorCorresponding

  We provide conditions for the feasibility of robust Pareto-improving (RPI) policies when markets are incomplete and the interest rate is below the growth rate. We allow for arbitrary heterogeneity in preferences and income risk and a wedge between the return to capital and bonds. An RPI improves risk sharing and can induce a more efficient level of capital. Elasticities of aggregate savings to changes in interest rates are the crucial ingredients to the feasibility of RPIs. Government debt may complement rather than substitute for capital in an RPI. Our analysis emphasizes the welfare-improving qualities of government bonds versus explicit redistribution. (JEL D52, E43, E62, H20, H63)

  PublisherDOI

• The Costs and Consequences of Sovereign Borrowing

  IMF Economic Review · 2024-05-22 · 1 citations

  article1st authorCorresponding
  PublisherDOI

• Putting the "Finance" into "Public Finance": A Theory of Capital Gains Taxation

  National Bureau of Economic Research · 2024-09-01 · 3 citations

  reportOpen access1st authorCorresponding
  PublisherDOI

• Pareto Improving Fiscal and Monetary Policies: Samuelson in the New Keynesian Model

  National Bureau of Economic Research · 2023-06-01 · 8 citations

  reportOpen access1st authorCorresponding

  This paper explores the positive and normative consequences of government bond issuances in a New Keynesian model with heterogeneous agents, focusing on how the stock of government bonds affects the cross-sectional allocation of resources in the spirit of Samuelson (1958). We characterize the Pareto optimal levels of government bonds and the associated monetary policy adjustments that should accompany Pareto-improving bond issuances. The paper introduces a simple phase diagram to analyze the global equilibrium dynamics of inflation, interest rates, and labor earnings in response to changes in the stock of government debt. The framework also provides a tractable tool to explore the use of fiscal policy to escape the Effective Lower Bound (ELB) on nominal interest rates and the resolution of the “forward guidance puzzle.” A common theme throughout is that following the monetary policy guidance from the standard Ricardian framework leads to excess fluctuations in income and inflation.

  PublisherDOI

• Pareto Improving Fiscal and Monetary Policies: Samuelson in the New Keynesian Model

  2023-06-16 · 11 citations

  preprintOpen access1st authorCorresponding

  This paper explores the positive and normative consequences of government bond issuances in a New Keynesian model with heterogeneous agents, focusing on how the stock of government bonds affects the cross-sectional allocation of resources in the spirit of Samuelson (1958). We characterize the Pareto optimal levels of government bonds and the associated monetary policy adjustments that should accompany Pareto-improving bond issuances. The paper introduces a simple phase diagram to analyze the global equilibrium dynamics of inflation, interest rates, and labor earnings in response to changes in the stock of government debt. The framework also provides a tractable tool to explore the use of fiscal policy to escape the Effective Lower Bound (ELB) on nominal interest rates and the resolution of the “forward guidance puzzle.” A common theme throughout is that following the monetary policy guidance from the standard Ricardian framework leads to excess fluctuations in income and inflation.

  PublisherOA PDFDOI

Frequent coauthors

• Erik Hurst

  188 shared

• Manuel Amador

  Federal Reserve Bank of Minneapolis

  128 shared

• Mark Bils

  University of Rochester

  52 shared

• Gita Gopinath

  46 shared

• Kerwin Kofi Charles

  38 shared

• Cristina Arellano

  Federal Reserve Bank of Minneapolis

  38 shared

• Iván Werning

  28 shared

• Hugo A. Hopenhayn

  27 shared