Research

Publications 


Working Papers

This paper investigates the impact of mergers on the product mix of multiproduct firms. We open the black box of post-merger efficiency improvements to reveal a new margin of adjustment along the product dimension. Using detailed Danish data, we establish empirically that the combined domestic product scope of the acquirer and target falls after a merger, and sales become more concentrated towards the core product. Moreover, the acquirer exports more products to more destinations that are costly to serve. To rationalize these findings, we develop a model of mergers between oligopolistic firms, highlighting merger-induced within-firm adjustments that promote international trade.

We study the firm dynamics associated with mergers and acquisitions (M&A) and their implications at the micro and macro levels. Our paper presents three main findings: (i) mergers generate a more fat-tailed firm-size distribution, thereby amplifying granular fluctuations and increasing aggregate volatility; (ii) the impact of mergers depends on strategic market power and endogenous markups; and (iii) under endogenous markups, we provide a novel characterization of the firm size-volatility relationship in which volatility declines disproportionately with size. We build a quantitative model of domestic horizontal mergers and find a sizeable impact of mergers on aggregate volatility using counterfactual analysis.

We present a rational theory of reform fatigue. At each instant a politician chooses to divide effort between reforms and the status quo. This choice is modeled as a two-armed bandit problem. Reforms are expected to yield a higher rate of output to the voter than the status quo, conditional on the politician being competent. We interpret competence as the administrative ability to ensure successful implementation of reforms. The politician’s competence is unknown ex-ante to both the politician and the voter. In addition the voter is unable to observe the politician’s effort on reform, but only observes  aggregate output. In equilibrium the voter gives the politician endogenous term lengths  that depend on the timing of success. The politician experiments with reforms at the  beginning of his first term, but gradually decreases the rate of reforms in the absence of early success. We call this gradual reduction in experimentation reform fatigue. The theory thus predicts that reform fatigue follows a political cycle. We provide empirical evidence of reform fatigue cycles in financial policies among presidential countries.