Published Papers
Quality Heterogeneity and Misallocation: The Welfare Benefits of Raising your Standards, (with Luca Macedoni)
Journal of International Economics, January 2022, 134:103544
Working Paper Version
Replication Package [Web Appendix: The CES Case] [Web Appendix: Other VES Cases] [Web Appendix: The Planner's Allocation]
Openness and Factor Shares: is Globalization Always Bad for Labor?, (with Asli Leblebicioglu).
Journal of International Economics, January 2021, 128:103406
Working Paper Version
Export Tax Rebates and Resource Misallocation: Evidence from a Large Developing Country, (with Qian Xuefeng and Mahmut Yasar).
Canadian Journal of Economics, November 2021, 54(4).
Markups and Misallocation with Evidence from Exchange Rate Shocks
Journal of Development Economics, September 2020, 146:1024-1094.
Working Paper Version
Credit and the Labor Share: Evidence from U.S. States (with Asli Leblebicioglu).
The Economic Journal, August 2020, 130: 1782–1816.
Web Appendix
Full replication files available on the EJ site
Exporter Heterogeneity and Price Discrimination: A Quantitative View (with Ina Simonovska and Jae Wook Jung).
Journal of International Economics, January 2019, 116:103-124.
Previously NBER Working Paper No. 21408.
WEB APPENDIX (See this appendix for an estimation of various models of monopolistic competition with non-homothetic preferences.)
Working Paper Version
FDI, Productivity and Country Growth: An Overview, 2009, (with Silvio Contessi).
Federal Reserve Bank of St. Louis Review, 91(2):61-78.
Journal of International Economics, January 2022, 134:103544
Working Paper Version
Replication Package [Web Appendix: The CES Case] [Web Appendix: Other VES Cases] [Web Appendix: The Planner's Allocation]
Openness and Factor Shares: is Globalization Always Bad for Labor?, (with Asli Leblebicioglu).
Journal of International Economics, January 2021, 128:103406
Working Paper Version
Export Tax Rebates and Resource Misallocation: Evidence from a Large Developing Country, (with Qian Xuefeng and Mahmut Yasar).
Canadian Journal of Economics, November 2021, 54(4).
Markups and Misallocation with Evidence from Exchange Rate Shocks
Journal of Development Economics, September 2020, 146:1024-1094.
Working Paper Version
Credit and the Labor Share: Evidence from U.S. States (with Asli Leblebicioglu).
The Economic Journal, August 2020, 130: 1782–1816.
Web Appendix
Full replication files available on the EJ site
Exporter Heterogeneity and Price Discrimination: A Quantitative View (with Ina Simonovska and Jae Wook Jung).
Journal of International Economics, January 2019, 116:103-124.
Previously NBER Working Paper No. 21408.
WEB APPENDIX (See this appendix for an estimation of various models of monopolistic competition with non-homothetic preferences.)
Working Paper Version
FDI, Productivity and Country Growth: An Overview, 2009, (with Silvio Contessi).
Federal Reserve Bank of St. Louis Review, 91(2):61-78.
Papers
Trade Liberalization and Chinese Students in U.S. Higher Education, CGD Working Paper #536 (February 2021), Revised November 2021 (with Gaurav Khanna, Kevin Shih, Mingzhi Xu, and Miaojie Yu).
Revise and Resubmit at Review of Economics and Statistics
CGD Blog Entry
We highlight a lesser-known consequence of China's integration into the world economy: the rise of services trade. We demonstrate how the US’s trade deficit in goods cycles back as a surplus in US exports of education services. Focusing on China's accession to the World Trade Organization, we show that Chinese cities more exposed to trade liberalization sent more students to US universities. Growth in housing income/wealth allowed Chinese families to afford US tuition, and more students financed their studies using personal funds. Our estimates suggest that recent trade wars could cost US universities around $1.05 bn in annual tuition revenue.
Quality Misallocation, Trade, and Regulations, CESifo Working Paper Series 9041 (April 2021), Revised April 2022 (with Luca Macedoni)
(Video Presentation)
This paper incorporates product standard regulations into a multi-country general equilibrium framework with firm heterogeneity and variable markups. We model regulations as a fixed cost that any firm selling to an economy must pay, consistent with stylized facts that we present. The fixed cost can improve allocative efficiency by reallocating production towards high-quality firms, who under-produce in the market allocation, and away from low-quality firms least able to bear compliance costs. Importantly, the fixed cost generates a positive externality on the rest of the world as it induces entry of high-quality firms, and it improves the terms of trade of the non-imposing countries. Because of this positive externality, given a level of market access, governments do not choose domestic standards efficiently. The result justifies international cooperation based on the fact that such cooperation can improve welfare. We estimate our model and apply its gravity formulation to quantify the global welfare consequences of altering regulatory policies, the extent of the positive externalities across countries, the effects of cooperation, and the comparison with further tariff liberalization.
Surviving Pandemics: The Role of Spillovers (with Meghana Ayyagari and Yuxi Cheng), May 2022, Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4116961
What role do spillover effects play in firm resilience during crises? Using high-frequency data on over 7 million import transactions, we ask this question in the context of the large trade disruption faced by US importers in the months immediately following the initial COVID-19 shock. While US firms saw a reduction in imports due to Covid-related trade disruptions to their suppliers, these effects were lower for importers in counties that received greater loans under the Paycheck Protection Program (PPP), a government stimulus program aimed at small businesses. A one standard deviation increase in exposure to PPP reduces the effect of the supply shock faced by the firm by approximately one-fifth. These effects exist even when the importer is not a direct recipient of PPP loans. The effects are largest in counties with larger number of small suppliers and higher input-output industry linkages, and those with greater share of small and medium enterprises (SMEs). We also see similar effects of PPP on reducing the effect of the trade shock on county-level employment growth. Our results point to local spillovers between SMEs that were PPP recipients and large importers as being an important determinant of firm resiliency during the pandemic.
Revise and Resubmit at Review of Economics and Statistics
CGD Blog Entry
We highlight a lesser-known consequence of China's integration into the world economy: the rise of services trade. We demonstrate how the US’s trade deficit in goods cycles back as a surplus in US exports of education services. Focusing on China's accession to the World Trade Organization, we show that Chinese cities more exposed to trade liberalization sent more students to US universities. Growth in housing income/wealth allowed Chinese families to afford US tuition, and more students financed their studies using personal funds. Our estimates suggest that recent trade wars could cost US universities around $1.05 bn in annual tuition revenue.
Quality Misallocation, Trade, and Regulations, CESifo Working Paper Series 9041 (April 2021), Revised April 2022 (with Luca Macedoni)
(Video Presentation)
This paper incorporates product standard regulations into a multi-country general equilibrium framework with firm heterogeneity and variable markups. We model regulations as a fixed cost that any firm selling to an economy must pay, consistent with stylized facts that we present. The fixed cost can improve allocative efficiency by reallocating production towards high-quality firms, who under-produce in the market allocation, and away from low-quality firms least able to bear compliance costs. Importantly, the fixed cost generates a positive externality on the rest of the world as it induces entry of high-quality firms, and it improves the terms of trade of the non-imposing countries. Because of this positive externality, given a level of market access, governments do not choose domestic standards efficiently. The result justifies international cooperation based on the fact that such cooperation can improve welfare. We estimate our model and apply its gravity formulation to quantify the global welfare consequences of altering regulatory policies, the extent of the positive externalities across countries, the effects of cooperation, and the comparison with further tariff liberalization.
Surviving Pandemics: The Role of Spillovers (with Meghana Ayyagari and Yuxi Cheng), May 2022, Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4116961
What role do spillover effects play in firm resilience during crises? Using high-frequency data on over 7 million import transactions, we ask this question in the context of the large trade disruption faced by US importers in the months immediately following the initial COVID-19 shock. While US firms saw a reduction in imports due to Covid-related trade disruptions to their suppliers, these effects were lower for importers in counties that received greater loans under the Paycheck Protection Program (PPP), a government stimulus program aimed at small businesses. A one standard deviation increase in exposure to PPP reduces the effect of the supply shock faced by the firm by approximately one-fifth. These effects exist even when the importer is not a direct recipient of PPP loans. The effects are largest in counties with larger number of small suppliers and higher input-output industry linkages, and those with greater share of small and medium enterprises (SMEs). We also see similar effects of PPP on reducing the effect of the trade shock on county-level employment growth. Our results point to local spillovers between SMEs that were PPP recipients and large importers as being an important determinant of firm resiliency during the pandemic.
Work In Progress
The Pass-Through of Productivity Gains from Offshoring
