Chansik Yoon

Welcome! I am a sixth-year Ph.D. candidate in Economics at Princeton University. 

I am on the 2024-2025 academic job market.

Primary Interests:

Secondary Interests:

You can find my CV here. 

Email: chansik.yoon@princeton.edu

Web: http://www.chansikyoon.com; Google Scholar page 

Job Market Paper

Growth in the Shaded Sun: The Role of International Development Finance and Corruption

[Draft]  [SSRN]

Abstract: Since the 1960s, the Development Assistance Committee (DAC) has been a primary conduit for development finance (DF) from developed to developing countries. In the last two decades, China has emerged as a major DF provider with distinct lending practices. I present the first comprehensive analysis of how developing countries strategically determine the amount, sources, and sectoral allocation of DF. Using project-level DF data and corruption indices from over 110 countries between 2000 and 2021, I find that recipient country corruption is linked to greater reliance on Chinese DF, including more projects and larger project sizes, compared to DAC DF. There are also disproportionately larger flows to hard-to-monitor sectors. Developing a growth model that includes active government diversion choices under varying monitoring intensities of DAC and Chinese DF, I explore the impact of Chinese DF on citizen welfare across 108 developing economies. Results show that similar corruption levels may lead to very different welfare outcomes depending on which sectors are being financed.

Working Paper

Trade Finance Frictions and International Business Cycles

[Draft]  [SSRN]

Abstract: I study how frictions in exporting firms' trade finance affect the business cycles of a small open economy within a general equilibrium framework. In the model, firms rely on external capital to cover large upfront fixed export costs but face credit constraints that limit borrowing based on the country’s financial development. In quantitative general equilibrium exercises, I show that the effect of trade finance frictions on the aggregate economy is not as significant as on firm-level outcomes due to two mechanisms. First, the decrease in the extensive margin of exports from trade finance frictions is offset by an increase in the average productivity of exporters, limiting its aggregate impact. This extensive margin effect strengthens, while the selection effect weakens, when firm productivity is less dispersed. Second, wage adjustments in general equilibrium reduces the magnitude of these channels, diminishing the role of trade finance frictions at the aggregate level. This wage-adjustment effect is stronger with inelastic labor supply.

Publications (initiated before and completed during Ph.D. studies)

[1] International Bank Lending Channel of Monetary Policy (with Silvia Albrizio, Sangyup Choi and Davide Furceri)

Journal of International Money and Finance, 2020 / [Publisher's version] Abstract: How does domestic monetary policy in systemic countries spillover to the rest of the world? This paper examines the transmission channel of domestic monetary policy in the cross-border context. We use exogenous shocks to monetary policy in systemically important economies, including the U.S., and local projections to estimate the dynamic effect of monetary policy shocks on bilateral cross-border bank lending. We find robust evidence that an increase in funding costs following an exogenous monetary tightening leads to a statistically and economically significant decline in cross-border bank lending. The effect is weakened during periods of high uncertainty. In contrast, the effect is found to not vary according to the degree of borrower country riskiness, further weakening support for the international portfolio rebalancing channel. 

[2] Policy Uncertainty and Foreign Direct Investment (with Sangyup Choi and Davide Furceri)

Review of International Economics, 2021 / [Publisher's version]  Abstract: While foreign direct investment (FDI) is known to be the most stable type of international capital flows, it may be particularly susceptible to heightened uncertainty because of its high fixed costs. We investigate the effect of domestic policy uncertainty on FDI inflows into 16 host countries using the OECD bilateral FDI panel data set and the economic policy uncertainty index from 1985 to 2013. The bilateral structure of the data enables us to disentangle pull factors of FDI from its push factors, thereby obtaining a cleaner causal identification of the higher domestic policy uncertainty effect. To alleviate remaining endogeneity concerns, we use the timing of “exogenous” elections as an instrument. We find that domestic policy uncertainty in a host country robustly reduces the FDI inflows, with the effect being larger in countries with less financial development. 

[3] International Fiscal-financial Spillovers: The Effect of Fiscal Shocks on Cross-border Bank Lending (with Sangyup Choi and Davide Furceri)

Open Economies Review, 2021 / [Publisher's version]Abstract: This paper sheds new light on the degree of international fiscal-financial spillovers by investigating the effect of domestic fiscal policies on cross-border bank lending. By estimating the dynamic response of U.S. cross-border bank lending towards 45 recipient countries to exogenous domestic fiscal shocks (both measured by spending and revenue) between 1990Q1 and 2012Q4, we find that expansionary domestic fiscal shocks lead to a statistically significant increase in cross-border bank lending and the size of the effect is comparable to an exogenous decline in the federal funds rate by about 25 bp (50 bp) for spending (revenue) shocks. The fiscal-financial spillovers we find are independent of changes in monetary policy or financial conditions measured by the VIX. The effects also depend on the sign of the fiscal shocks and the underlying economic conditions of a source country. While capital controls seem to play some moderating role, we do not find systematic and statistically significant differences in the spillover effects across recipient countries, depending on their exchange rate regime. The extension of the analysis to fiscal shocks for a panel of 16 small open economies largely confirms the U.S. economy’s findings. 

[4] Uncertainty, Financial Markets, and Monetary Policy over the Last Century (with Sangyup Choi) 

The B.E. Journal of Macroeconomics (Advances), 2022 / [Publisher's version]Abstract: What has been the effect of uncertainty shocks in the U.S. economy over the last century? What are the roles of the financial channel and monetary policy channel in propagating uncertainty shocks? Our empirical strategies enable us to distinguish between the effects of uncertainty shocks on key macroeconomic and financial variables transmitted through each channel. A hundred years of data further allow us to answer these questions from a novel historical perspective. This paper finds robust evidence that financial conditions captured by both borrowing costs and the availability of credit have played a crucial role in propagating uncertainty shocks over the last century. However, heightened uncertainty does not necessarily amplify the adverse effect of financial shocks, suggesting an asymmetric interaction between uncertainty and financial shocks. Interestingly, the monetary policy stance seems to play only a minor role in propagating uncertainty shocks, which is in sharp contrast to the recent claim that binding zero-lower-bound amplifies the negative effect of uncertainty shocks. We argue that the contribution of constrained monetary policy to amplifying uncertainty shocks is largely masked by the joint concurrence of binding zero-lower-bound and tightened financial conditions. 

References

Prof. Mark Aguiar

Department of Economics

Princeton University

maguiar@princeton.edu

 

Prof. Richard Rogerson

Department of Economics

Princeton University

rdr@princeton.edu


Prof. Mikkel Plagborg-Møller

Department of Economics

Princeton University

mikkelpm@princeton.edu

Prior Education

Yonsei University, South Korea