Philip Barrett

About Me

I am an Economist at the International Monetary Fund, working in the Middle East and Central Asia Department. My interests are fiscal policy, international macroeconomics, and computational economics.


Working papers

The fiscal cost of conflict: Evidence from Afghanistan 2005-2016 IMF Working Paper: September 2018 Latest version: September 2018 Code for Generalized Synthetic Control estimator

I use a monthly panel of provincially-collected central government revenues and conflict fatalities to estimate government revenues lost due to conflict in Afghanistan since 2005. I identify causal effects by instrumenting for conflict using pre-sample ethno-linguistic share. Headline estimates are very large, implying total revenue losses since 2005 of $3bn, and future revenue gains from peace of about 6 percent of GDP per year. Reduced collection efficiency, rather than lower economic activity, appears to be the key channel. OLS estimates understate the causal effect by a factor of four. Comparing to estimates from Powell’s (2017) generalized synthetic control method suggests that this bias results from omitted variables and measurement error in equal share. The findings underscore the considerable economic loss due to conflict, and the importance of careful identification in measuring this loss.

Interest-Growth Differentials and Debt Limits in Advanced Economies IMF Working Paper: April 2018 Latest version: December 2018 Press coverage: Forbes, Fiscal Times

Do persistently low nominal interest rates mean that governments can safely borrow more? To addresses this question, I extend the model of Ghosh et al. (2013) to allow for persistent stochastic changes in nominal interest and growth rates. The key model parameter is the long-run difference between nominal interest and growth rates; if negative, maximum sustainable debts (debt limits) are unbounded. I show how both VAR- and spectral-based methods produce negative point estimates of this long-run differential, but cannot reject positive values at standard significance levels. I calibrate the model to the UK using positive but statistically plausible average interest-growth differentials. This produces debt limits which increase by only around 5% GDP as interest rates fall after 2008. In contrast, only a tiny change in the long-run average interest-growth differential – from the 95th to the 97.5th percentile of the distribution – is required to move average debt limits by the same amount.

Why are Countries’ Asset Portfolios Exposed to Nominal Exchange Rates? (With Jonathan Adams) IMF Working Paper: December 2017 Latest version: September 2018

Most countries hold large gross asset positions, lending in their domestic currency and borrowing in foreign currency. As a result, their balance sheets are exposed to nominal exchange rate movements. We argue that when asset markets are incomplete, this exposure provides partial insurance against shocks that move exchange rates. We demonstrate that this insurance motive can simultaneously generate realistic gross asset positions and resolve the Backus-Smith puzzle: that countries’ relative consumption and real exchange rates are negatively correlated. Local perturbation methods are inaccurate in this setting as they approximate around the wrong interest rate, even when they correctly characterize the average portfolio holdings. So to accurately solve the equilibrium portfolio problem, we extend Maliar and Maliar (2015)’s global projection method.

Work in progress

Terms of Trade Shocks and Heterogeneous International Portfolio Positions (With Jonathan Adams) Latest version: September 2018

How do terms of trade shocks affect open economies? We use a panel of exogenous terms of trade shocks for 93 countries to estimate the dynamic effects on macroeconomic variables. We find that terms of trade shocks resemble wealth shocks: a terms of trade improvement increases consumption and investment by more than output and decreases net exports, contrary to prior evidence and standard theory. To explain this outcome, we also show that terms of trade improvements increase countries' net foreign asset position, due to valuation effects of nominal net assets. To make sense of these results, we augment a standard business cycle model with realistic international portfolio choice. We estimate the model for a large sample of countries, and show that it can replicate our empirical findings: terms of trade improvements look like wealth shocks, and their importance for business cycles is heterogeneous, depending on the country's international portfolio position.



University of Chicago

PhD, Economics June 2016

London School of Economics & Political Science

M.Sc. Econometrics & Mathematical Economics, with Distinction June 2008

University of Oxford

M.A. Mathematics, First Class June 2005

Full CV (pdf)



R package implementing Powell's (2017) Generalized Synthetic Control method. This allows consistent estimation of treatment effect when 1) omitted variables are not fully captured by time and unit fixed effects, and 2) treatment is non-dichotomous. The package provides functions for calculating point estimates and for hypothesis testing.
Links:    Vignette    CRAN    github page


A Julia package to provide basic functionality for manipulating value sets in dynamic and repeated games. Currently includes: cnoversions between point and normal-distance forms, inner & outer approximate set sums, convex hulls, convex unions, vector addition, plotting, and cropping
Links:    Tutorial    github page


This project implements the Abreu-Sannikov (2013) method for computing sets of equilibrium values in two-player games of complete information. Interface in R, underlying code in C++.
Links:    Manual    User guide    Source package    Windows binaries    github page


R package to provide easy & fast Chebychev approximation of arbitrary 1- and 2-dimensional functions. Also generates shape-preserving 1-dimensional approximations.
Links:    Manual    User guide    Source package    Windows binaries    github page


R package to provide fast and accurate linear, bilinear and trilinear interpolation. Interface in R, underlying calculation in C++.
Links:    Manual    Source package    Windows binaries    github page