Research

Job Market Paper

This paper studies the role of supply chain reallocations in the transmission of trade shocks across countries and sectors. I introduce a global sourcing framework in a multi-country, multi-sector general equilibrium environment, with both variable and fixed costs of sourcing inputs internationally. Supply chain reallocations are characterized by endogenous responses regarding producers' sourcing location choices and entry decisions in domestic production. I then calibrate the model to the World Input-Output Database and use it to quantify the trade and welfare consequences of two hypothetical trade policy changes, namely the US-China trade conflict and the effects of preferential trade agreements. The quantitative analysis reveals two novel angles through which global supply chains transmit shocks. First, allowing endogenous supply chain reallocations amplifies the trade and welfare consequences of shocks to variable trade costs. Second, changes in fixed sourcing costs are essential in welfare evaluation and could generate a 2-3 times larger impact than similar changes in variable trade costs.

Awards and presentations:

• Winner of 2021 Graduate Student Competition of the EIIT conference

• Midwest Trade and Theory Conference Fall 2021

Working Paper

This paper evaluates the impact of preferential trade agreements (PTA) on the organization of global value chains (GVCs), especially during the recovery period after the Great Trade Collapse (GTC). Using time-series data from the World Input-Output Table (WIOT), I first empirically test the relationship between bilateral trade flows and PTA status using a gravity specification. The estimated results indicate that a bilateral PTA relation can generate additional strength for GVC-related (intermediate) trade during post-GTC recovery. I then introduce a novel method to decompose the impact of PTAs into the direct on-the-border price channel and indirect behind-border channel. With the data structure of WIOT and some additional assumptions, I discover that though the first channel was dominant before the GTC, the second behind-border channel contributed considerably to the recovery of GVC-related trade and accounted for 25% of the aggregate impact.

IMF working paper No. 2022/006, with IMF colleagues

The auto sector is macro-critical in many European countries and constitutes one of the main supply chains in the region. Using a multi-sector and multi-country general equilibrium model, this paper presents a quantitative assessment of the impact of global lockdowns—both directly and via supply chains—during the initial phase of the COVID-19 pandemic on the auto sector and aggregate activity in Europe. Our results suggest that the pandemic-induced labor supply shocks would have a significant adverse impact on the major auto producers in Europe, with one-third of the decline in the value-added of the car sector attributable to spillovers via supply chains within and across borders. Within borders, lockdowns in the services sector have a bigger adverse impact, reflecting their larger size and associated demand effects. Across borders, lockdowns in other European countries dominate, but spillovers from outside the region are still sizable. Our results suggest that ongoing supply chain disruptions and containment measures will continue to weigh on the auto sector’s near-term prospects.

Work in Progress, with Felipe Benguria and Felipe Saffie

We develop a dynamic model of economic geography with interregional trade and migration to study the geographic transmission of commodity price shocks. We show that even small migration flows could indicate considerable interregional transmission of commodity shocks due to this channel, as local prices and wages respond in general equilibrium to offset migration incentives. Focusing on Brazil’s commodity boom during the 2000s, we calibrate the model using interstate trade and migration flows and evaluate the response of regional and sectoral skill premia.