Chiara Fratto


The reallocative effects of mobility restrictions on workers and firms. An application to the West Bank” (JMP)

Research financed by Pozen Family Center for Human Rights Research Grant, and University of Chicago Overseas Dissertation Research Grant

Link to paper, Link to Online Appendix

I identify quasi-exogenous variation in the introduction of mobility restrictions in the West Bank during the Second Intifada (2000-2006) to study the distribution of residents, jobs and firms in response to changes in the commuters’ market access. A village experiencing a loss in market access equivalent to a 10% increase in travel time towards all destinations on average suffered a loss of 0.3% in residents. However, it also experienced an increase of 0.3% in jobs, with the effect being particularly strong in wholesale and retail trade. The decrease in residents and the increase in jobs is reconciled with a decline in commuting of residents working outside the village. In a model of commuting, the sign of the effect of changes in commuting costs on residents and jobs depends on the initial direction of the commuting flows and the spatial sorting in the city. The effect of mobility restrictions on both GDP and workers’ welfare are large: mobility restrictions decreased aggregate GDP by 12%; the welfare loss is estimated to be 2.6%.

Accounting for Post-Crisis Inflation and Employment: A Retro Analysis” (with H. Uhlig) – Review of Economic Dynamics (forthcoming)

Link to paper , Link to Online Appendix

Why was there no deflation and what accounts for inflation after 2008? Is the missing deflation puzzle an indictment of Phillips-curve-type analyses, as Hall (2011) has argued, or is all good and well, if one fixes the model appropriately with new features or those available prior to 2008, as Negro, Giannoni and Schorfheide (2015) have found? We argue that it is helpful to utilize Smets and Wouters (2007) in its original pre-2008 version, to shed light on this issue. We find that the missing deflation is not news. We find that shocks to price and wage markups alone are nearly enough to account for inflation before 2008, and that they do so substantially post 2007 as well. We confirm that the relationship described by the Phillips curve is weak after 2007, but it was also so before. As a consequence, we argue that asserted post-crisis model failures were just as visible pre-crisis already. If the missing deflation puzzle is an indictment of this model, then the missing explanation of inflation before the crisis should have been a pre-crisis indictment already.


IT Sector in the West Bank, Barriers to Mobility and Knowledge Spillover” (with Elisa Giannone)

Research in progress financed by PEDL-CEPR with Exploratory Grant 2015

Link to PEDL page on the project

The goal of this project is to shed light on the sources of the IT sector growth in a developing country, exploiting the recent success of the West Bank. Mobility barriers decrease the opportunity cost of investing in IT at the expenses of good production. Their variation allows us to obtain an estimate of the reduction in the opportunity cost necessary to induce local entrepreneurs to invest in IT. First, we conduct face-to-face and phone interviews with managers of firms and employees with a focus on IT sector in Palestine. We will create a novel dataset with about 400 firms representative of the national economy focusing on: 1) firms demographics and performance; 2) firms’ network; 3) employees background. We complement this unique data source with granular data on firms from the Palestinian Census Bureau of Statistics, never used for research before. Second, we aim to estimate the causal impact of barriers to mobility on the rapid development of the IT sector. We believe that this work can have important policy implications for other developing countries to spur a fast-growing IT sector and enhance sustainable long-run growth that we will estimate through the lens of a firm dynamic model.

“The effects of the enlargement of the European Union on worker and firm relocation and cross-country differences in ease to start a business”

“High-Frequency effect of security measures in the West Bank on firm performance. Evidence from Twitter”

Research in progress financed by Pearson Institute for the study and resolution of global conflicts research grant.