Template-Type: ReDIF-Article 1.0 Title: Economic Shocks and Household Consumption Smoothing Strategies Author-Name: Nikita Céspedes Reynaga Author-Workplace-Name: Universidad San Ignacio de Loyola, Banco Central de Reserva del Perú. Author-Name: Manuel Talledo Author-Workplace-Name: Pontificia Universidad Católica del Perú Abstract: This paper examines the ability of Peruvian households to smooth consumption in the face of job loss and family business failure shocks, using the weak form of the permanent income hypothesis. The analysis distinguishes between ex ante mechanisms—such as insurance coverage and access to formal credit markets—and ex post responses adopted after a shock occurs. The results show that:(i) on average, households are able to smooth consumption; (ii) this ability is concentrated among those with access to the formal financial system, although some smoothing was also observed during the pandemic among households with informal savings; (iii) households tend to smooth spending on essential categories, such as food and health, but not on non-essential items including clothing, education, and leisure; in the case of health, smoothing is observed only when households have insurance coverage; and (iv) eight types of ex post coping strategies are evaluated, most of which help mitigate consumption losses-particularly multiple jobholding and government transfers. The findings also reveal substantial heterogeneity: higher-income households benefit from broader access to financial instruments, including severance savings, while lower-income households face more limited options and display weaker smoothing capacity. Classification-JEL: E21, G52, H31, I3. Keywords: Permanent income, transitory income, consumption, economic shocks, weak form of thepermanent income hypothesis Journal: Revista Economia Year: 2025 Issue: 95 Volume: 48 Pages: 1-33 File-URL: https://revistas.pucp.edu.pe/index.php/economia/article/view/31539/27680 File-Format: Application/pdf Handle: RePEc:pcp:pucrev:y:2025:i:95:p:1-33 Template-Type: ReDIF-Article 1.0 Title: Balancing Infrastructure and Human Capital: Optimal Fiscal Composition for Sustainable Growth Author-Name: Octavio Martínez-Baltodano Author-Workplace-Name: Universidad Autónoma de Chile Author-Name: María Haydée Fonseca-Mairena Author-Workplace-Name: Pontificia Universidad Católica de Maule Abstract: This paper investigates the relationship between fiscal policy composition and long-run economic growth by extending the classic Alesina–Rodrik framework. We develop a dynamic model that distinguishes between capital-augmenting public investments (such as infrastructure) and labor-enhancing expenditures (including human capital development), both financed through a wealth tax. Our central hypothesis is that an optimal allocation of public spending exists which maximizes the net return on capital and thereby supports sustained growth. However, political pressures—stemming from heterogeneous factor endowments and median voter preferences—can drive fiscal policies away from this efficiency benchmark, leading to suboptimal tax rates and spending compositions that may even trigger growth traps. By employing comparative statics and equilibrium analysis, we demonstrate how redistributive forces influence the choice of fiscal instruments, ultimately affecting aggregate productivity and capital accumulation. The findings offer novel theoretical insights into the trade-offs between redistribution and growth, underscoring the critical importance of aligning fiscal composition with underlying production technologies to achieve both efficient and politically feasible outcomes. Classification-JEL: H20, O11, P35. Keywords: Fiscal policy composition, long-run economic growth, public investments, redistribution Journal: Revista Economia Year: 2025 Issue: 95 Volume: 48 Pages: 34-68 File-URL: https://revistas.pucp.edu.pe/index.php/economia/article/view/31540/27681 File-Format: Application/pdf Handle: RePEc:pcp:pucrev:y:2025:i:95:p:34-68 Template-Type: ReDIF-Article 1.0 Title: Impact of Natural Disasters on Household Health and Education Expenditure: Evidence from El Niño Phenomenon in Peru Author-Name: Raul Malpartida Author-Workplace-Name: Univerisdad de Piura Author-Name: Martin Guembes Author-Workplace-Name: Univerisdad de Piura Abstract: This study examines the impact of the 2017 El Niño phenomenon on per capita expenditures on health and education among rural households in the northern coastal region of Peru. We use household-level panel data from 2015 to 2019, along with district-level precipitation data. A difference-in-differences (DiD) model is proposed to compare households affected by the phenomenon with those that were not affected. The results show that the 2017 El Niño phenomenon had a negative effect on per capita expenditures on health and education for the affected rural households, possibly driven by a negative shock to agricultural income. Consequently, the findings suggest that individuals in affected households have reduced access to the benefits of acquiring health and education services, increasing their vulnerability to health risks and cognitive skill development challenges. Classification-JEL: D10, I15, I25, Q54. Keywords: Fiscal policy composition, long-run economic growth, public investments, redistribution Journal: Revista Economia Year: 2025 Issue: 95 Volume: 48 Pages: 69-93 File-URL: https://revistas.pucp.edu.pe/index.php/economia/article/view/31733/27800 File-Format: Application/pdf Handle: RePEc:pcp:pucrev:y:2025:i:95:p:69-93 Template-Type: ReDIF-Article 1.0 Title: Empirical determinants of zombification in petrochemical firms. The case of Colombia Author-Name: Bruno de Jesús Rahmer Author-Workplace-Name: Fundación Universitaria Tecnológico Comfenalco Abstract: Corporations with persistently negative profitability, excessive leverage, and declining real revenue growth, are colloquially referred to as "zombie firms" due to their economically unviable nature. Such financially distressed entities operate in both developed economies and emerging markets. This paper quantifies the financial performance of zombie firms within Colombia’s petrochemical cluster using a five-component methodology. The research applies a probit regression, a comparative analysis of financial constraint indices, an investment-cash flow sensitivity model, a corporate flow of funds analysis, and a cash flow sensitivity of cash model. The probit model establishes that indebtedness, minimal asset tangibility, and inadequate operating cash flow function as the primary statistically determinant predictors of zombie status. The comparative analysis of financial constraint indices confirms the superior discriminatory power of the Whited-Wu index over the Kaplan-Zingales and Size-Age alternatives for classifying these corporations. Furthermore, the investment-cash flow sensitivity model establishes that zombie firms systematically curtail capital expenditures in response to their distressed nature, a behavior not observed in their solvent counterparts. The corporate flow of funds analysis derives a structural explanation: an inability to generate internal cash flow and volatility in working capital primarily cause the financing deficit of underperforming entities, whereas these factors are not determinant for solvent corporations. Finally, the cash flow sensitivity of cash model confirms that a precautionary motive dictates the cash accumulation policies of zombie firms, a behavior absent in financially viable entities. Classification-JEL: G32, D22, O16 Keywords: Cash Flow Sensitivity of Cash, Corporate Liquidity Management, Financial Constraints,Financial Distress, Investment-cash flow sensitivity, Zombie Firms Journal: Revista Economia Year: 2025 Issue: 95 Volume: 48 Pages: 94-123 File-URL: https://revistas.pucp.edu.pe/index.php/economia/article/view/31799/27820 File-Format: Application/pdf Handle: RePEc:pcp:pucrev:y:2025:i:95:p:94-123