Dario Cestau

Ph.D. candidate in Financial Economics and Economics,
at the Tepper School of Business, Carnegie Mellon University.
Available for interviews at AEA/ASSA 2014 Annual Meeting in Philadelphia in January.
E-mail: dcestau@andrew.cmu.edu

  • Carnegie Mellon University - Ph.D. candidate - 2014.
  • Carnegie Mellon University - M.S. - 2010.
  • Universidad de Montevideo - M.S. - 2010.
  • Universidad de Montevideo - B.A. - 2006.
  • Advised by:
  • Richard C. Green - Dennis Epple - Holger Sieg
  • Teaching and Research Interests:
  • Pricing of financial assets - municipal bonds - state and local finance - public economics - economics of education - political economy
  • Useful links:
  • vita - Teaching statement - Research statement
  • Job Market Paper:
  • "Political Affiliation and Risk of Default: Are Republicans or Democrats More Fiscally Responsible?"
  • Abstract: Past research has largely ignored the effects that politicians and political parties have on the risk of default of state and federal governments. The objective of this paper is to address this important policy question using data from Credit Default Swaps (CDS), a derivative contract designed to protect from risk of default. I use polls and prediction market outcomes to measure the likely outcome of future state and federal elections. The findings of the paper suggest that state Republican governors have a significant positive effect on CDS spreads. On average, Republican governors reduce credit spreads by around six basis points, half of CDS standard deviation during the period of analysis. Ex-ante, Republican candidates are good news for debt holders. At the federal level, I find that the prospects of an Obama administration had ambiguous effects on the bond market. I find an adverse effect on credit risks in 2008 and a positive effect in 2012. An Obama victory versus Romney implied a decrease in credit spreads by more than 20 basis points.

    Published Papers: Working Papers:
  • "Admitting Students to Selective Education Programs: Merit, Profiling, and Affirmative Action" with Holger Sieg and Dennis Epple, (revising to re-submit to the Journal of Political Economy)
  • .

    Other Published work: Honors and Awards:
  • Excellence Fellowship - Universidad de Montevideo, 2002-2005.
  • Doctoral Studies Scholarship, Carnegie Mellon University, Tepper School of Business, 2008-2011.
  • Teaching:
  • Instructor: Intermiadte Microeconomics
  • Teaching Assistant: Intermidate Macroeconomics, Intermiadte Microeconomics, Game Theroy and Applications, Statistical Decision Making