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Luis Portes

Professor, Economics, Feliciano School of Business

Office:: School of Business 557
Email:: portesl@montclair.edu
Phone:: 973-655-2126
Degrees:: BA, Instituto Tecnologico Autonomo de Mexico; MA, Georgetown University; PhD, Georgetown University
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Luis is an Associate Professor at the Department of Economics and Finance at Montclair State University. His research focuses on macroeconomics and international economics. Using computational techniques he takes a theoretical approach in the study of business cycles, international trade and inequality.

http://frontpage.montclair.edu/portesl/

Specialization

Macroeconomics
International Economics
Development Economics

Resume/CV

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Research Projects

On the Distributional Effects of Trade Policy: Dynamics of Household Saving and Asset Prices

(Abstract) This paper studies the effect of trade liberalization on inequality. We develop a theoretical framework that generates economy-wide distributions of wealth and income for different levels of trade protection. The model unambiguously determines the short-term and long-term effect of liberalization on inequality; and rationalizes why larger inequality can be the outcome of a welfare enhancing policy, as households reduce their buffer savings when liberalization lowers the price of food. The framework reconciles the increase in inequality, the fall in the value of land, and small farmers' opposition to freer trade, that have featured in different liberalization episodes. We also present empirical support for the model's predictions.

Quarterly Review of Economics and Finance, Vol. 49 (3), 2009.

Remittances, Poverty, and Inequality

(Abstract) This paper explores the effect of remittances across the distribution of income. Based on a panel of 46 countries that covers the period between 1970 and 2000, we find that the effect of remittances is non-monotone across the distribution of income and strongest in low income countries. The impact of remittances is positive and decreasing in income for the bottom 70 percent of the population, and negative and increasing in income in the top 20 percent of the population. All else equal, remittances decrease inequality as their effect is mostly felt among the poor and they are negatively related to the income of the rich. We estimate that for low income countries a 1 percent increase in remittances would increase the first decile's income by approximately 0.43 percent, while the same change would increase the seventh decile's income by only 0.04 percent. In contrast, a 1 percent increase in remittances is associated with a 0.10 percent decrease in the income of the top 10 percent of the population.

Journal of Economic Development, Vol. 34 (1), 2009.

On Balance Sheets, Idiosyncratic Risk and Aggregate Volatility (with Deniz Ozenbas)

(Abstract) Since the mid-1980s firm level financial volatility has increased, while the U.S. economy has experienced a sharp decline in the volatility of GDP growth. Do firms adjust their capital structure in response to higher idiosyncratic risk? And if so, could that affect the performance of the aggregate economy? Using a dynamic general equilibrium model we show that in the presence of larger firm-specific risk, firms shift the composition of their balance sheets towards more self-financing and away from debt. In the presence of financial accelerator-like frictions, larger idiosyncratic risk translates into greater external financing costs, steering firms to borrow less to counteract larger premia. Model simulations suggest that larger idiosyncratic risk dampens the financial accelerator and can lead to a reduction in output volatility of up to 40 percent; and up to a 16 percent decline in firm leverage.

B.E. Journal of Macroeconomics, Vol. 9 (1), 2009.

Aggregate Gains of International Diversification through Foreign Direct Investment: An Inquiry into the Moderation of U.S. Business Cycles

(Abstract) Over the last 20 years the U.S. economy has experienced a strong reduction in the volatility of GDP growth. This paper documents and models the rapid growth of multinational corporations as a source of gradual decline in output and investment volatility. The paper introduces internationally diversified multinational firms into the financial accelerator framework; where international operations provide multinational firms with smoother paths of net worth that result in less volatile financing costs, investment and production. Model simulations suggest that larger multinational corporations can account for up to a 19 percent and 27 percent decline in output and investment volatility, respectively.

Global Economy Journal, Vol. 7 (4), 2007.

Foreign Direct Investment and Aggregate Volatility (with Dong-Kyoon Kim)

(Abstract) In the last 30 years most developed economies have experienced a strong reduction in the volatility of their economic cycles. Yet, the causes are not fully understood. This study documents and shows how the expansion of multinational corporations around the world has mitigated the propagation of shocks within host and home economies over time, leading to smoother business cycles. Based on sample of 178 countries we find that Foreign Direct Investment inflows and outflows are significantly associated with lower output volatility. The underlying channel is that international diversification provides multinational firms with smoother paths of sales and earnings that result in less volatile investment and production. Our findings provide new insights into the benefits of globalization as well policy prescriptions for more stable growth in both developing and developed economies.

International Journal of Business Research, Vol. 7 (3), 2007.

Professional Experience

Lecturer, Instituto Tecnologico Autonomo de Mexico (ITAM) (1999 - 2000)
Lecturer, Georgetown University (2002 - 2002)
Consultant, World Bank (2010 - 2015)
Visiting Professor, University of Graz (2011 - 2011)
Lecturer, Georgetown University (2005 - 2005)
Lecturer, Georgetown University (2004 - 2004)
Consultant, Inter-American Development Bank (2003 - 2003)
Consultant, Inter-American Development Bank (2002 - 2002)
Consultant, Inter-American Development Bank (2015 - 2015)
Consultant, Inter-American Development Bank (2016 - 2017)
Visiting Professor, University of Graz (2019 - 2019)
Lecturer, University of Graz (2010 - Present)
Professor, Montclair State University (2005 - Present)

Honors & Awards

Doctoral Fellowship, CONACYT (Mexico) (August 2000)
Distinguished Research, Academy of Economics and Economics Education ( 2011)
Who's Who in America, Marquis Who's Who ( 2010)
Who's Who in America, Marquis Who's Who ( 2009)
Dissertation Defense Distinction, Georgetown University (May 2005)
Merit Based Georgetown University Graduate Fellowship, Georgetown University (January 2002)
Outstanding Reviewer Award, International Journal of Development Issues (September 2016)

Refereed Published Articles

L. San Vicente Portes, D. Kim (2007). Foreign Direct Investment and Aggregate Volatility. International Journal of Business Research
D. Kim, L. San Vicente Portes (2007). The Role of International Corporate Diversification on the Probability of Financial Distress. Review of Business Research
L. San Vicente Portes (2007). Aggregate Gains of International Diversification through Foreign Direct Investment: An Inquiry into the Moderation of U.S. Business Cycles. Global Economy Journal
L. San Vicente Portes (2008). Poverty and Distributional Implications of Rising Food Prices. European Journal of Management
L. San Vicente Portes (2008). Foreign Direct Investment and Inequality. International Journal of Business Research
, D. Ozenbas, L. San Vicente Portes (2009). Relationship between GDP Volatility, Idiosyncratic Stock Price Risk and Firms’ Capital Structure: An Explanation within the Financial Accelerator Framework. The Business Review, Cambridge
L. San Vicente Portes (2009). Remittances, Poverty and Inequality. Journal of Economic Development
L. San Vicente Portes, D. Ozenbas (2009). On Balance Sheets, Idiosyncratic Risk and Aggregate Volatility. The B. E. Journal of Macroeconomics
, A. Meziani, L. San Vicente Portes (2010). Micro-Cap Stocks: On the Quest for Lower Risk and Higher Returns. International Review of Business Research
, S. Paul, L. San Vicente Portes (2009). Corruption and Foreign Direct Investment. Journal of Ethics and Critical Thinking
L. San Vicente Portes (2009). On the Distributional Effects of Trade Policy: Dynamics of Households Saving and Asset Prices. Quarterly Review of Economics and Finance
D. Ozenbas, L. San Vicente Portes (2011). Idiosyncratic Volatility and Capital Structure: Firms’ Response to Larger Risk within a Financial Accelerator Framework. Financial Decisions
D. Ozenbas, L. San Vicente Portes (2010). Capital Structure and Firm-Level Risk: Trends and Macroeconomic Implications. Review of Business Research
D. Ozenbas, L. San Vicente Portes (2011). Does Firm Size Matter? The Relationship between Firm Level Volatility, GDP Volatility and Capital Structure Decisions for Firms of Different Size Groups. The Business Review, Cambridge
L. San Vicente Portes (2011). Foreign Direct Investment Return Differentials. Journal of International Finance Studies
E. Bewayo, L. San Vicente Portes (2016). Environmental Factors for Social Entrepreneurship Success: Comparing Four Regions. American Journal of Management
A. Meziani, L. San Vicente Portes, D. Ozenbas (2015). Liquidity under Extreme Market Volatility: The Case of the SPY, IVV and RSP Funds. Financial Decisions
D. Ozenbas, A. Meziani, L. San Vicente Portes (2014). Liquidity Effects of Firm Size and Market Distress on Index Tracking ETFs. Journal of International Financial Studies
D. Ozenbas, L. San Vicente Portes (2014). Stock Price Volatility and Firm Capital Structure Decisions During the Financial Crisis. The Journal of American Academy of Business, Cambridge
L. San Vicente Portes, V. Atal (2014). The Big Mac Index: A Shortcut To Inflation And Exchange Rate Dynamics? Price Tracking And Predictive Properties. International Business and Economics Research Journal
L. San Vicente Portes (2012). Macroeconomic and Financial Effects of High and Volatile Oil Prices. Journal of Economics and Economic Education Research
L. San Vicente Portes (2012). The Role of Institutions in Explaining Foreign Direct Investment Return Differentials. Review of Business Research
L. San Vicente Portes, V. Atal, M. Juarez Torres (2019). From Households to National Statistics: Macroeconomic Effects of Women's Empowerment. Economic Modelling
L. San Vicente Portes, V. Atal, M. Juarez Torres (2019). Women's Empowerment: Aggregate Effects on Savings and Wealth. Banco de México Documentos de Investigación
V. Atal, O. Gharehgozli, L. San Vicente Portes (2022). Higher Labour Market Bargaining Power, Higher Unemployment in Recessions. Applied Economics Letters

Published Proceedings

L. San Vicente Portes, D. Ozenbas (5s). 2006. On Balance Sheets, Idiosyncratic Risk and Aggregate Volatility: Is Firm Volatility Good for the Economy? Proceedings of the 6th Global Conference on Business and Economics.
A. Meziani, L. San Vicente Portes (5s). . Seeking alpha beyond small cap markets: the risk and returns dynamics of micro-cap stocks Northeast Business and Economics Association (NBEA
D. Ozenbas, L. San Vicente Portes (5s). 2011. Idiosyncratic Volatility and Capital Structure: Firms’ Response to Larger Risk within a Financial Accelerator Framework Twelfth International Conference of the Society for Global Business & Economic Development

Books & Chapters

L. San Vicente Portes (2010). Labor Hours, Employment, and "The Great Moderation". Nova Science Publishers
R. Yepez, L. San Vicente Portes, L. Garcia (2013). Planning for Higher Oil Prices: Power Sector Impact in Latin America and the Caribbean. The World Bank
V. Atal, L. San Vicente Portes (2012). Women’s Empowerment and Households’ Consumption-Savings Decisions. Economic Empowerment for Women: A Global Perspective (M. Lownes-Jackson and R. Guy ed.), Informing Science Press
L. San Vicente Portes (2021). Productivity and Energy Intensity in Latin America. Inter-American Development Bank