Dario Cestau
PhD candidate in Economics and Financial Economics
E-mail: dcestau@andrew.cmu.edu
Phone: 001-(412)-390-5204
Tepper School of Business
Carnegie Mellon University
5000 Forbes Ave, Pittsburgh, PA 15213
www.contrib.andrew.cmu.edu/~dcestau/
RESEARCH
Fields of Interest – Asset pricing – municipal bonds – state and local finance – public economics – economics
of education – political economy
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 political parties have on the risk of default of state
governments. The objective of this paper is to address this important policy question using data from Credit
Default Swaps (CDS), a type of derivative contracts designed to protect from risk of default. I use polls data to
exploit any information available on election outcomes prior to Election Day. 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 more than five percent, which represents almost half of CDS standard
deviation during the period of analysis. Ex-ante, Republican candidates are good news for debtholders. An event
case study and placebo panel regression analysis provide robustness checks of the direction of this effect. I
present evidence that the effect is stronger for states with severe financial distress and highly contested
gubernatorial elections.
PUBLISHED PAPERS – "Tax-Subsidized Underpricing: The Market for Build America Bonds" - with Green and Schurhoff
Journal of Monetary Economics (2013)
 Abstract: Build America Bonds (BABs) were issued by municipalities for twenty months as part of the 2009 fiscal
package. Unlike traditional tax-exempt municipals, BABs are taxable to the holder, but the Treasury rebates 35%
of the coupon to the issuer. The stated purpose was to provide municipalities access to a more liquid market
including foreign, tax-exempt, and tax-deferred investors. We find BABs do not exhibit greater liquidity than
traditional municipals. BABs are more underpriced initially, particularly for interdealer trades. BABs also show a
substitution from underwriter fees toward more underpricing, suggesting the underpricing is a strategic response
to the tax subsidy.
WORKING PAPERS – "Admitting Students to Selective Education Programs: Merit, Profiling, and Affirmative Action" –
with Epple and Sieg – revising to re-submit to the Journal of Political Economy
 Abstract: For decades, colleges and universities have struggled to increase participation of minority and
disadvantaged students. Urban school districts confront a parallel challenge; minority and disadvantaged students
are underrepresented in selective programs that use merit-based admission. We analyze optimal school district
policy and develop an econometric framework providing a united treatment of affirmative action and profiling.
Implementing the model for a central-city district, we find profiling by race and income, affirmative action for lowincome students, and no affirmative action with respect race. Counterfactual analysis reveals that these policies
achieve 80% of African American enrollment that would be could be attained by race-based affirmative action.
Other Publications – "Why Governments Choose Different Debt Maturity Structures?" – Revista de FCEE, 2011
EDUCATION
CARNEGIE MELLON UNIVERSITY, TEPPER SCHOOL OF BUSINESS:
Ph.D.Candidate in Economics.
GPA: 3.88/4.0
 Concentrations: Financial Economics
 Honors: Doctoral Studies Scholarship
Master of Science in Economics.
GPA: 3.92/4.0
UNIVERSIDAD DE MONTEVIDEO:
Master of Science in Economics.
Bachelor of Science in Economics
 Honors: Excellence Fellowship
GPA: 3.88/4.0
GPA: 10.07/12.0
Pittsburgh, PA
5/14 (Expected)
5/10
Montevideo, Uruguay
10/10
4/06
TEACHING
 UNDERGRADUATES
Instructor: Intermediate Microeconomics
Teaching Assistant: Microeconomics, Macroeconomics, Economic History, Quantitative Analysis
 MASTER OF BUSINESS ADMINISTRATION – MBA
Teaching assistant: Statistical Decision Making. (Instructor: Dennis Epple)
 DOCTORAL PROGRAM:
Teaching assistant: Game Theory and Applications
ADDITIONAL INFORMATION






Advised by: Richard C. Green - Dennis Epple - Holger Sieg
Areas of Expertise: Finance, economics, political economy
Private Sector Work Experience: Watson Wyatt Worldwide - Consultancy, 07/07 – 07/08
Academic Work Experience: Research Assistant position: Richard C. Green - Dennis Epple & Holger Sieg
Languages: Bi-lingual Spanish & English and basic Portuguese.
Hobbies: Soccer, Ski and mountain biking
REFERENCES
Richard C Green
Senior Associate Dean
Richard M. and Margaret S. Cyert Chair
Professor of Financial Economics
Tepper School of Business
Carnegie Mellon University
Pittsburgh, PA 15213
E-mail: rcgreen@cmu.edu
Dennis Epple
Thomas Lord University Professor of
Economics
Head of Economics
Tepper School of Business
Carnegie Mellon University
Pittsburgh, PA 15213
E-mail: epple@cmu.edu
PLACEMENT OFFICER
(Reference letters requests)
Lawrence Rapp
Assistant Director, Ph.D. Student Services
Carnegie Mellon University
Tepper School of Business
5000 Forbes Avenue
Pittsburgh, PA 15213
Phone: 412-268-1319
Email: lrapp@andrew.cmu.edu
Holger Sieg
J. M. Cohen Term Chair in Economics
Department of Economics
University of Pennsylvania
Philadelphia, PA 19104
E-Mail: holgers@econ.upenn.edu