Luis M. Espinoza Bardales

CV

Google Scholar

Working papers:

• Contracting frictions, geography, and multinational firms: evidence from Mexico (Job market paper)

I explore how contracting frictions and geography influence the trade costs faced by multinationals in their affiliates located in Mexico relative to domestic firms. I document two key facts. First, distance to firm’s home countries influences firms’ sourcing patterns. Second, sectors with a larger presence of foreign affiliates are more intensive in relationship-specific inputs. I develop a small open economy model with multiple sectors, imperfect contracting, input relationship-specificity, global sourcing and multinational production. I compute a set of counterfactual equilibria to gauge the relative importance of contracting frictions, trade costs, and productivity in the price advantage of multinationals over domestic firms. My findings show that, contrary to priors, foreign firms seem to have a disadvantage relative to domestic firms in trade costs and contracting frictions. Eliminating differences in contracting frictions between foreign and domestic firms leads to a reduction in real GNP of 2.7 percent, while doing so only for productivity reduces real GNP by 2.2 percent.

• Imported inputs, contracting frictions and productivity 

I explore  to what extent the positive effect that imported inputs has on domestic firm's productivity is accounted by an (indirect) access to foreign contract enforcement institutions. Based on the identifying assumption that customized inputs are affected by contracting frictions but homogeneous inputs are not, I can separately identify this channel from a more broad “quality” effect (foreign inputs are vertically differentiated from domestic ones) by combining a rich microdata from Mexico at the firm-input-source level and a theoretical model of contracting frictions and international trade. 

• Steamships, trade costs and economic development

I study the role of specialization in economic growth in the context of Great Divergence period in the 19th and early 20th centuries. This paper builds on the findings of Pascali (2017), who documented that the reduction in trade costs during this period (due to the expansion of steamships), contributed to the divergence in income among countries. This paper fills that void by revisiting Pascali’s findings in the light of a two-sector model of endogenous growth with non-homothetic preferences and learning by doing (LBD). If LBD only exists in the “modern” sector, a trade-induced specialization in the traditional sector lowers economic growth. To test the model empirically, I digitized and standardized a dataset of international trade at the product-level using data from the United Kingdom, France, Germany and the U.S.

Pre doctoral papers:

• Shifting Gears: A Growth Diagnostic of Panama, with Ricardo Hausmann and Miguel Ángel Santos.

• Diagnostico de Crecimiento de Chiapas: La Trampa de la Baja Productividad, with Ricardo Hausmann and Miguel Ángel Santos.

• Why is Chiapas Poor?, with Dan Levy, Ricardo Hausmann, Miguel Ángel Santos and Miguel Flores.

• Un análisis exploratorio de convergencia en el PIB per cápita entre departamentos en el Perú, 1979-2008, with Juan M. del Pozo.