Published Papers
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, Forthcoming
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 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, Forthcoming
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
Quality Heterogeneity and Misallocation: The Welfare Benefits of Raising your Standards, February 2021 (with Luca Macedoni)
Revise and Resubmit at Journal of International Economics
Web Appendix: The CES Case Web Appendix: Other VES Cases Web Appendix: The Planner's Allocation
The imposition of stricter regulations and product standards often has unequal effects on firms, as small, low-quality firms cannot afford to comply with the new restrictions. Using data from Chile, we find that more restrictive standards are associated with a reallocation of domestic sales from small to large firms, which has allocative efficiency implications. Guided by this evidence, we study the welfare effects of the reallocation brought about by standards in a model with monopolistically competitive, heterogeneous firms, and a general demand system. The standard improves welfare if low-quality firms over-produce in the market allocation relative to the efficient allocation. We find that market distortions are driven entirely by the presence of variable markups, and exist in both homothetic and non-homothetic frameworks. We estimate our model across Chilean industries and find that there are substantial possible welfare gains from moving to the optimal policy.
Trade Liberalization and Chinese Students in U.S. Higher Education, CGD Working Paper #536, February 2021 (with Gaurav Khanna, Kevin Shih, Mingzhi Xu, and Miaojie Yu)
CGD Blog Entry
We highlight a lesser known consequence of China's growth and integration into the world economy in relation to the United States: the rise of services trade. We demonstrate that the US's trade deficit in goods cycle back as a surplus in exports of education services. Focusing on China’s accession to the World Trade Organization, we show that Chinese cities more exposed to this trade liberalization episode sent more students to US universities. Results indicate that growth in housing income/wealth was an important channel that allowed Chinese families in the top of the income distribution to afford US tuition, consistent with large growth in the share of Chinese students who financed their studies using personal funds. Other mechanisms, such as changing returns to education or information flows, appear to play less of a role. We also inform distributional consequences for the US. Trade liberalization relatively induced increases in the shares of Chinese students studying non-STEM fields and attending less-selective US universities. Student inflows were similar in destinations with low and high levels of human capital, indicating that educational exports dampened regional inequalities. Our estimates suggest that recent trade wars could cost US universities around $1.15 bn in tuition revenue.
Quality Misallocation, Trade, and Regulations, April 2021 (with Luca Macedoni)
(Video Presentation)
Recent trade agreements have shifted their focus to non-tariff barriers such as regulations and product standards, which have been traditionally treated as pure domestic policies. The imposition of such standards reallocates production from small to large, high quality firms. 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 improves allocative efficiency, by reallocating production towards high-quality firms, who under-produce in the market allocation. Furthermore, the fixed cost generates a positive externality on the rest of the world as it induces entry of high-quality firms, but unilateral regulation lowers the terms of trade of the imposing country. The result justifies international cooperation based on the fact that such cooperation can improve welfare, rather than preventing negative consequences of tariff wars. We estimate our model and apply its gravity formulation to quantify the welfare consequences of imposing the optimal regulation, the extent of the positive externalities across countries, and the effects of cooperation.
Revise and Resubmit at Journal of International Economics
Web Appendix: The CES Case Web Appendix: Other VES Cases Web Appendix: The Planner's Allocation
The imposition of stricter regulations and product standards often has unequal effects on firms, as small, low-quality firms cannot afford to comply with the new restrictions. Using data from Chile, we find that more restrictive standards are associated with a reallocation of domestic sales from small to large firms, which has allocative efficiency implications. Guided by this evidence, we study the welfare effects of the reallocation brought about by standards in a model with monopolistically competitive, heterogeneous firms, and a general demand system. The standard improves welfare if low-quality firms over-produce in the market allocation relative to the efficient allocation. We find that market distortions are driven entirely by the presence of variable markups, and exist in both homothetic and non-homothetic frameworks. We estimate our model across Chilean industries and find that there are substantial possible welfare gains from moving to the optimal policy.
Trade Liberalization and Chinese Students in U.S. Higher Education, CGD Working Paper #536, February 2021 (with Gaurav Khanna, Kevin Shih, Mingzhi Xu, and Miaojie Yu)
CGD Blog Entry
We highlight a lesser known consequence of China's growth and integration into the world economy in relation to the United States: the rise of services trade. We demonstrate that the US's trade deficit in goods cycle back as a surplus in exports of education services. Focusing on China’s accession to the World Trade Organization, we show that Chinese cities more exposed to this trade liberalization episode sent more students to US universities. Results indicate that growth in housing income/wealth was an important channel that allowed Chinese families in the top of the income distribution to afford US tuition, consistent with large growth in the share of Chinese students who financed their studies using personal funds. Other mechanisms, such as changing returns to education or information flows, appear to play less of a role. We also inform distributional consequences for the US. Trade liberalization relatively induced increases in the shares of Chinese students studying non-STEM fields and attending less-selective US universities. Student inflows were similar in destinations with low and high levels of human capital, indicating that educational exports dampened regional inequalities. Our estimates suggest that recent trade wars could cost US universities around $1.15 bn in tuition revenue.
Quality Misallocation, Trade, and Regulations, April 2021 (with Luca Macedoni)
(Video Presentation)
Recent trade agreements have shifted their focus to non-tariff barriers such as regulations and product standards, which have been traditionally treated as pure domestic policies. The imposition of such standards reallocates production from small to large, high quality firms. 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 improves allocative efficiency, by reallocating production towards high-quality firms, who under-produce in the market allocation. Furthermore, the fixed cost generates a positive externality on the rest of the world as it induces entry of high-quality firms, but unilateral regulation lowers the terms of trade of the imposing country. The result justifies international cooperation based on the fact that such cooperation can improve welfare, rather than preventing negative consequences of tariff wars. We estimate our model and apply its gravity formulation to quantify the welfare consequences of imposing the optimal regulation, the extent of the positive externalities across countries, and the effects of cooperation.
Work In Progress
Surviving Pandemics: Supply Chains and Corporate Immunity (with Meghana Ayyagari and Yuxi Cheng)
The Pass-Through of Productivity Gains from Offshoring
The Pass-Through of Productivity Gains from Offshoring
