Working Papers
Revise and Resubmit, Review of Economic Studies
Economic growth has varied tremendously across regions of the United States over the past several decades. In this paper, I develop a dynamic quantitative spatial model to study the distributional implications of this uneven growth. The model incorporates two key mechanisms that link welfare to local economic conditions: migration costs and homeownership. Using the model, I show that uneven regional growth has important distributional consequences. On average, a 1% shock to local productivity raises residents’ welfare by 0.36%. The pass-through from local productivity shocks to welfare varies substantially by age and housing tenure. I find that homeownership plays a central role in spatial redistribution: in an otherwise similar model without homeownership, the average welfare effect of the same shock is just 0.01%. This is because house price changes counteract the welfare effects of wage changes for renters, but augment them for owners. Finally, I analyze the effects of two housing policy counterfactuals: relaxing land-use regulations and eliminating the mortgage interest deduction. Both policies mitigate spatial redistribution, but the link between welfare and local economic conditions remains strong.
We build a dynamic model of an urban area which combines key features of quantitative spatial models and macro-housing models. It integrates a large number of locations, forward-looking households, commuting, costly migration, uninsurable income risk, and housing tenure choice. We cast the model in continuous time, while shocks arrive and some choices are taken at discrete time intervals. This “mixed time” approach allows us to efficiently compute both steady state equilibrium and transition dynamics, even when there are thousands of location pairs. Using a quantitative model of the San Francisco Bay Area, we show how accounting for forward-looking behavior, spatial frictions, and transition dynamics changes the estimated effects of spatially heterogeneous shocks and policies that have traditionally been studied with static models.
Publications
Demand, Growth, and Deleveraging (with Conor Walsh).
Review of Economic Dynamics, 51 (2023): 795-812.
Review of Economic Dynamics, 51 (2023): 795-812.
We present empirical evidence that weak household demand contributed to a reduction in firm entry in the Great Recession. Motivated by this evidence, we study the general equilibrium response of aggregate economic growth to a severe deleveraging event. To do so, we combine a standard incomplete markets model with a frontier class of endogenous growth models. A large reduction in credit access causes the zero lower bound to bind, inducing a drop in demand via employment rationing. Decreased demand in turn lowers the return to entrepreneurship and innovation, endogenously lowering productivity. We find that a persistent recession induced by deleveraging can significantly influence growth in productivity. Our main result is a powerful feedback effect: households increase savings in response to future slow growth, exacerbate the fall in demand, and further slow the recovery.
Can Self-Help Groups Really be 'Self-Help'? (with Joseph Kaboski and Eva Van Leemput).
Review of Economic Studies, 83 (2016): 1614-1644. Appendix
Review of Economic Studies, 83 (2016): 1614-1644. Appendix
We provide an experimental and theoretical evaluation of a cost-reducing innovation in the delivery of “self-help group” microfinance services, in which privatized agents earn payments through membership fees for providing services. Under the status quo, agents are paid by an outside donor and offer members free services. In our multi-country randomized control trial we evaluate the change in this incentive scheme on agent behavior and performance, and on overall village-level outcomes. We find that privatized agents start groups, attract members, mobilize savings, and intermediate loans at similar levels after a year but at much lower costs to the NGO. At the village level, we find higher levels of borrowing, business-related savings, and investment in business. Examining mechanisms, we find that self-help groups serve more business-oriented clientele when facilitated by agents who face strong financial incentives.
Notes
Comment on Hsieh and Moretti (2019)
Revise and Resubmit, American Economic Journal: Macroeconomics
Selected Work in Progress
Does Globalization Undermine Sustainability? (with Joseph Shapiro and Katherine Wagner)
The Geography of Wealth: Shocks, Mobility, and Precautionary Savings. (with Maximiliano Dvorkin)
Natural Disaster Policy in a Warming World (with Katherine Wagner)