Marta Cota

Hi! I am a tenure track Assistant Professor at the  Finance Department at Nova SBE in Lisbon. I have a Ph.D. degree in Economics from CERGE-EI.

My research interests lie between Macroeconomics and Household Finance. I develop structural models that encompass individual expectation heterogeneity and heterogeneity in search frictions. 

My CV is linked here.                      

Working papers:

     Job Market Paper 

     Financial Skills and Search in the Mortgage Market (joint work with Ante Sterc) - paper link (working version!)

This paper examines how financial literacy shapes households' mortgage decisions through a structural model of mortgage search. Using a unique U.S. dataset that integrates detailed mortgage information with objective measures of financial literacy, we find that households with lower financial literacy are 4% less likely to engage in mortgage search and end up locking in at 33 basis points higher mortgage rates. Moreover, they are 5.1 p.p. less likely to refinance, which defines a lower bound of $575 in annual mortgage overpayments.  To explore the impact of financial skills and search behavior on mortgage rate outcomes, we develop a mortgage search model that incorporates endogenous financial skill accumulation and heterogeneous search frictions. Our results show that: (i) greater mortgage access increases delinquency risks for less financially skilled households, (ii) targeted financial education can help reduce these risks, and (iii) low mortgage rates primarily benefit financially literate households through refinancing, ultimately contributing to greater consumption inequality. Finally, we find that easier mortgage access, driven by increased information availability, reinforces financial skill accumulation, suggesting that targeted policies may be more effective today than in the past.

Extrapolative Expectations and Retirement Savings - paper link, 2nd revision at The Review of Finance

This paper examines how biased income expectations influence retirement savings decisions. Low-income workers, often pessimistic about future earnings, prioritize liquid savings, while high-income workers, overly optimistic, delay retirement contributions. I develop a lifecycle model incorporating these biases and U.S. 401(k) retirement plan features. The model aligns with empirical data on contribution patterns without relying on adjustment costs, showing that biased expectations alone explain observed savings behavior. Simulations reveal that retirement contributions rise over time but at different rates, with low-income workers contributing later than high-income workers. Automatic enrollment policies initially boost contributions but decline over time. However, cumulative savings increase by 6% on average, with gains exceeding 10% for the bottom 25% of earners. My findings underscore the importance of incorporating income expectations into retirement policy design. Automatic enrollment delivers significant welfare gains, particularly for lower-income workers, and reduces retirement inequality.

Network Effects in Mortgage Refinancing (joint with Mauro Mastrogiacomo and Maarten van Rooij from the Dutch National Bank)

This paper estimates peer effects in mortgage refinancing in the Netherlands. We combine granular co-worker and neighbor network data with the Dutch registry data on individuals and their respective households and estimate peer effects in mortgage refinancing within a two-year window. First, we outline respective network characteristics and quantify network measures informative of the information transmission. Second, we employ the overlapping network approach to ensure robustness of our estimates. Overlapping network model estimates control for a rich set of mortgage specifics and borrower's characteristics and shows significant effects of co-worker mortgage refinancing, suggestive of workplace information transmission. Currently, we are working on a structural model that underscores the variation in individual search friction based on information exposure. 

Work in progress:

"Social Networks and the Search for Credit", joint work with Ante Sterc- slides available upon request 

"Gender Differences in Savings over the Lifecycle: The Role of Financial Literacy", joint with Marta Morazzoni and Maria Frech, slides available upon request 

"Retirement Savings and Self-Employment in an Ageing Economy ", with Marta Morazzoni