I model financial dollarization in an emerging market -the denomination of household savings and corporate debt in US dollars- as a phenomenon which arises endogenously within a country from the interaction between domestic agents. In the model, the dollar offers households and entrepreneurs a hedge against exchange rate pass-through into prices and income risk. Households have a higher risk aversion and/or stronger hedging motives for wanting to save in dollars. As a result, entrepreneurs issue debt in dollars, cheaper than in local currency, and are exposed to exchange rate risk, while households save in dollars and are insured against this risk in exchange for a lower return. Dollarization then emerges within the country from the risk-sharing of domestic agents, rather than with the developed world. A decrease in the foreign supply of dollars to the country can reinforce the hedging properties of the dollar and increase domestic dollarization. The model can rationalize four empirical facts: first, countries that exhibit high dollarization of domestic savings also exhibit high dollarization of domestic corporate debt; second, higher dollarization is related to a higher pass-through into prices; third, dollarized economies feature a negative correlation of real GDP growth and dollar appreciations; fourth, their local currencies offer a higher risk premium over the dollar. At the household-level, evidence from Uruguay is consistent with the model's portfolio predictions that indicate that an agent's dollar demand increases with a higher pass-through into prices and with a stronger negative correlation between their income and dollar appreciations.

The transient climate response (TCR) is the change in global mean temperature at the time of an exogenous doubling in atmospheric CO₂ concentration increasing at a rate of 1% per year. A problem with estimating the TCR using observational data is that observed CO₂ concentrations depend in turn on temperature. Therefore, the observed concentration data are endogenous, potentially leading to simultaneous causation bias of regression estimates of the TCR. We address this problem by employing instrumental variables regression, which uses changes in radiative forcing external to earth systems to provide quasi-experiments that can be used to estimate the TCR. Because the modern instrumental record is short, we focus on decadal fluctuations (up to 30-year changes), which also mitigate some statistical issues associated with highly persistent temperature and concentration data. Our estimates of the TCR for these shorter horizons, normalized to be comparable to the traditional 70-year TCR, fall within the range in the IPCC-AR5 and provide new observational confirmation of model-based estimates.

We used a two-part model for the estimation of the price elasticity of participation and consumption of cigarettes by the duration of the smoking habit and a continuous-time split-population model for the estimation of prevalence and duration of smoking onset and smoking addiction, allowing for covariates in the participation component of the model. Results: We computed the total price elasticity of consumption of cigarettes by quartiles of addiction and found that for the people located in the lowest quartile of addiction the total price elasticity is around -0.51; while for those located in the highest quartile of addiction this figure is only -0.19. Then, a 10% increase in cigarette prices, via taxes, reduces the consumption of those in the early stages of the addiction by 5% and for those with a longer history of addiction by only 1.9%. Estimating the continuous-time split-population model we found that, at the mean starting age of 15 years, an increase of 10% in real cigarette prices is expected to delay smoking onset by almost two and a half years. On the other hand, the same policy is less effective to reduce the duration of the habit because there is no meaningful relationship between the duration of the smoking habit and the real price of cigarettes.The policy of raising cigarette excise taxes, to increment prices, seems to be more effective to delay smoking onset. On the other hand, the same policy is less effective to reduce the duration of the habit. A policy recommendation that emerges from this evidence is that for people with a developed addiction a combination of increasing taxes and other public health policies, like cessation therapies, could prove more effective.