LUIS A. SIMON
PhD Candidate in Economics,
The University of Chicago
I'm a PhD student at the University of Chicago. I'm interested in macrofinance, financial economics, and monetary policy. At the moment, I'm working on understanding the role of capital requirements for financial stability. I will be available for interviews at the 2020 ASSA meetings in San Diego.
WORK IN PROGRESS
Capital requirements involve a trade-off between financial intermediation and financial stability. I analyze this trade-off in a macroeconomic model that allows for systemic bank runs, à la Gertler and Kiyotaki (2015). I show that fixed capital requirements make the economy more prone to runs because they slow down the recovery and reduce welfare compared to the laissez-faire benchmark. On the other hand, appropriately chosen countercyclical capital requirements can increase both financial stability and welfare. To weigh the costs and benefits of this policy, I estimate the probability of a systemic shock to the financial sector from CDS data and find it to be around 0.5% per year prior to the 2007-09 financial crisis. I then show that the cost of implementing a countercyclical capital requirement that would have prevented the run on repo markets in 2008 would have been 3% of steady state bank capital and less than 0.1% in consumption terms.
WHAT ARE THE AGGREGATE AND REDISTRIBUTIONARY EFFECTS OF CHANGING THE SIZE AND COMPOSITION OF THE CENTRAL BANK’S BALANCE SHEET?
This paper uses a production economy with intermediaries facing an equity capital constraint to analyze the effects of changes in the size and composition of the balance sheet of the central bank. Tilting the portfolio towards riskier assets helps the economy overcome crisis states faster but redistributes wealth from the households to the intermediaries.
HOW DOES BANK SIZE AFFECT MONETARY POLICY TRANSMISSION?
I document some empirical facts about the size distribution of commercial banks and the characteristics of banks by size. I then show how the presence of large banks affects the transmission of changes in the policy rate to consumer rates.
EDUCATION
PH.D., ECONOMICS
The University of Chicago. Chicago, IL
Expected June 2020
M.A., ECONOMICS
The University of Chicago. Chicago, IL
June 2017
M.A., ECONOMIC THEORY
Instituto Tecnologico Autonomo de Mexico (ITAM). Mexico City, Mexico
August 2014
B.A., ECONOMICS
Instituto Tecnologico Autonomo de Mexico (ITAM). Mexico City, Mexico
November 2013
Graduated with highest honors.
PROFESSIONAL EXPERIENCE
PHD INTERN. AQR CAPITAL MANAGEMENT
June 2018 - August 2018
ECONOMIST. BANK OF MEXICO, DIRECTORATE OF ECONOMIC RESEARCH
October 2012 - August 2014
INTERN. BANK OF MEXICO, DIRECTORATE OF ECONOMIC RESEARCH
January 2012 - July 2012
SOFTWARE
Matlab
Python
Stata
LaTeX
LANGUAGES
Spanish (native)
English (fluent)
French (conversational)