Research


WORKING PAPERS/WORK IN PROGRESS

[1] "Policy Effects of International Taxation on Firm Dynamics and Capital Structure", [New version: 12th March 2019] - PaperSlides
Winner of the Goran Skogh Prize for 2018 (European Association of Law and Economics)
Abstract: 
I develop a dynamic quantitative framework, with heterogeneous firms and financial frictions, to study impact of corporate tax reforms directed at multinational firms. The model quantifies the impact of such reforms on productivity, GDP and welfare. Firms draw idiosyncratic productivity shocks, invest in capital and choose optimal financial structure. They choose endogenously whether to service the foreign market, through either exporting or FDI. I apply the framework to the removal of the U.S. repatriation tax as in the 2017 Tax Cuts and Jobs Act. The impact trades-off two selection effects --- offshoring from more U.S. multinationals versus greater entry that drives-out less productive firms. Comparing steady states, the tax reform brings higher productivity, GDP, welfare and approximate revenue neutrality. Dynamics are significant: along the transition, there are temporary welfare losses from short-term adverse labour market conditions. Financial frictions are also significant: their exclusion brings welfare losses when comparing steady states.

[2] "Cross-Border Effects of U.S. Tax Policy" Slides

[3] "A Re-Examination of Financing Constraints and Investment to Cash Flow Sensitivity", (with Shuyun May Li).


PEER-REVIEWED PUBLICATIONS

[1] "Effectiveness of the Australian Fiscal Stimulus Package: a DSGE Analysis", (with Shuyun May Li), 2016, Economic Record, 92, 94-120 - Link
Abstract:
We develop and estimate a small open economy dynamic stochastic general equilibrium model to investigate the effectiveness of the Australian fiscal stimulus package introduced in the aftermath of the global financial crisis (GFC). The estimated model implies a fiscal multiplier of 0.9 on impact and 1.26 with one-year monetary accommodation. Utilising the estimated shocks – in particular, the fiscal shocks that mimic the stimulus transfers – we conduct several counterfactual policy experiments. Our results suggest that the stimulus transfers were almost equally important as the concurrent monetary easing actions in helping the Australian economy to avoid a recession after the GFC.


POLICY PAPERS

[1] ``The Effects of Removing the Corporate Repatriation Tax'', 2017, Center for Research on the Wisconsin Economy (CROWE) -  Link