Job Market Paper
From Ideas to Trade (with Fernando Yu)
This paper studies how cross-country differences in the allocation of technology affect bilateral trade. Do both the stock and dispersion of technology matter for exports? We build on Eaton and Kortum (2002) and develop a Ricardian model where the process of innovation determines both the stock and dispersion of technology in each country. Like in the EK model, a higher stock of technology and lower relative input costs foster exports. Unlike in the EK model, a country's overall comparative advantage depends on the country-specific dispersion of technology which governs the advantage of having lower input costs. In particular, a smaller technological dispersion benefits countries with lower input costs since trade is determined by these and not technological differences. The opposite is true for a high dispersion. To test our model we create a novel dataset of historical patents and use these to construct our technology variables. Our results confirm our model's predictions and indicate that technological innovation matters for trade through both the stock of patents and their dispersion across the economy.
Distance and Trade: A Natural Experiment in South America - link coming soon
One of the major puzzles in the literature of empirical international trade is that the negative effect of geographic distance on bilateral trade is highly persistent in time. In this paper I exploit a natural experiment, the Pulp Mill Conflict, that took place in South America to obtain accurate estimates of the elasticity of transport costs with respect to bilateral trade. The conflict introduces a time component to the geographic distance between country pairs, which allows for the inclusion of bilateral pair fixed effects to control for all characteristics other than the time-varying distances. Results suggest that traditional gravity estimates suffer form (upward) omitted variable bias. Nevertheless, transportation costs are still very important for explaining bilateral trade.
Unveiling the pattern of technological diversification
This paper studies the evolution of the patterns of diversification in technological capabilities along the level of per capita income. Using data on historical international patents in the USPTO for 84 developed and developing countries I show the existence of a U-shaped relationship between income and sectoral concentration that is consistent with the findings of Imbs and Wacziarg (2003) for production and Cadot et. al. (2011) for exports. As GDP per capita rises economies become more (technologically) diversified, until they reach a turning point where they start specializing again. I relate this finding to various theories of innovation but offer an alternative explanation based on a Ricardian-HO hybrid model that is more consistent with the empirical regularities found in the data.