Working Papers

    • Abstract: We study how regional shocks spill over across US local markets through intra-firm market networks and explore how such spillovers reshape household welfare across regions. We identify spillovers by linking data on barcode-region-level prices and quantities with producer-level information and by exploiting variation in firms' exposure to sudden differential drops in local house prices. We find that a firm's local sales decrease in response to a direct negative local demand shock and do so more strongly to indirect negative demand shocks originating in its other markets. The intra-firm cross-market spillover effects occur because (i) firms replace higher-value products---higher sales per product, unit price, and organic sales share---with lower-value products in response to negative demand shocks, and (ii) such product replacements are synchronized across markets within each firm. Counterfactual analysis using multiregion model with endogenous quality adjustment shows that our channel generates a novel and economically sizable regional redistribution effect during the Great Recession.

[Updated version using Census Longitudinal Business Database coming soon!]
    • Abstract: Using a dataset on U.S. establishments and their firm affiliations, we document a cross-sectoral propagation of import competition from China ("China shock") through firms’ internal networks. The employment of an establishment in one industry is negatively affected by the China shock hitting other industries in which establishments within the same firm operate. This indirect propagation mechanism works toward both manufacturing and non-manufacturing establishments. Our finding holds after controlling for sectoral or regional shocks affecting the establishment’s own industry or location. We demonstrate the macroeconomic significance of this finding by showing that the indirect propagation mechanism is preserved at the sector level. Therefore, we hypothesize that the great economic, social, and political impact of China shock found in the literature could be even greater once we incorporate the propagation mechanism.

  • "Business Cycles with Input Complementarity" [New Version Soon!]

[This paper subsumes a previous paper circulated under the title "Price-Cost Markup Cyclicality: New Evidence and Implications"]
    • Abstract: We study a business cycle with a Translog production function. We empirically identify a complementarity between labor and energy that leads to procyclical returns to scale, which is not compatible with the tightly parameterized production functions commonly used in the literature (Cobb-Douglas and CES). We---therefore---propose a flexible Translog production function that not only features complementarity-induced procyclical returns to scale but is also consistent with a balanced growth path. A simple calibrated business cycle model with the proposed production function generates data-consistent dynamics following demand shocks without relying on either nominal rigidities or countercyclical markups.

    • Abstract: How do firms' global connectedness and market power affect their performance and resilience during crises? While global production and export networks expose firms to foreign shocks, they potentially reduce firms' susceptibility to domestic shocks through international diversification. Additionally, increases in market power could provide buffers by allowing margins for adjustment. Using weekly global stock market data combined with firm-level supply chain, export, and balance sheet information, we show that firms with higher global connectedness and market power are more resilient to domestic pandemic shocks. Consistent with the diversification channel, global connectedness (but not market power) alleviates domestic pandemic shocks only if foreign economies experience smaller shocks. Finally, pandemic-driven cross-firm reallocations were concentrated between March and May when cross-country COVID-19 dispersion dramatically increased.

  • "Propagation of Housing Market Disruptions during the Great Recession: Supply Chain Network Channel" [New Version Soon!]

    • Abstract: This paper investigates a role of supply chain network in transmitting housing market disruptions during the Great Recession. We build up a unique micro-level data that combines local housing market condition, firms' sales in each local market, and firm-level supply chain network information. Exploiting firm-specific demand shock stemming from cross-market variation in house price changes and an initial difference in firms' local sales, we find that such shock not only affects downstream firms but also transmits to their suppliers. The estimated supplier-level elasticity is quantitatively large, reflecting larger role of downstream firms with higher elasticity in the network structure. To quantify such propagation at the aggregate level, we build up a parsimonious network model calibrated to match the micro-level data. Our counterfactual analysis shows that approximately 18% of the observed drop in the aggregate output can be attributed to the propagating role of the supply chain network.

Works in Progress

  • "Import Competition and Worker-Firm Dynamics: Evidence from Canadian Administrative Data"

    • with Myeong Wan Kim (U of Toronto) & Yue Yu (U of Toronto)

  • "Monetary Policy Transmission in a Multi-Sector Small Open Economy"

  • "Market Structure, Production Networks, and International Business Cycles"

  • "Returns to Scales and Markups: Micro-level Decomposition using Administrative Data"

Policy Works

  • "Sectoral Price Rigidity, Production Networks, and Monetary Policy Transmission in Korea"

[Research Department Funded Project, Bank of Korea, 2020]
    • with Youngjae Lee (Bank of Korea)

Pre-Doctoral Publications

Extension of my Master's Thesis at SNU