I am Chanwoo Kim, an Economist at the Bank of Korea, currently seconded to the Federal Reserve Bank of New York.
My research focuses on how micro-level heterogeneity in firms and financial institutions propagates to the macroeconomy.
Click here for Curriculum Vitae.
Contact: ckim@bok.or.kr
Markup, Customer Base, and Firm Dynamics, Job Market Paper, 2020
This paper studies how firm-level market power, accumulated through customer base, affects markup cyclicality and life-cycle growth. Using COMPUSTAT data and a panel local projection approach, I document two new empirical findings: (i) firm-level markup decreases by 0.15\% in response to a 1\% positive TFP shock and by 0.5\% following an expansionary monetary policy shock, and (ii) smaller firms exhibit two to three times stronger countercyclical markup responses than larger firms. To explain these patterns, I develop a firm dynamics model with customer base accumulation and endogenous entry and exit. The key mechanism is an invest-harvest tradeoff: firms lower markups to build customer base when conditions are favorable. The calibrated model matches both the empirical impulse responses and, without targeting, the age-dependent growth and exit rates observed in the data.
Forward Guidance under HANK & SAM, 2020
I study the effect of forward guidance in a framework that has an incomplete market and endogenous income risk (HANK&SAM). By expressing the equations as functions of the deep parameters of the model, I obtain three results. First, I show that countercyclical income risk aggravates the forward guidance puzzle. Second, I find that income risk is weakly countercyclical under a standard calibration of the model. Third, I show how the effect of monetary policy changes due to the difference in the marginal propensity to consumption under the framework.
Short Run Firm Responses to Tax Shock, 2020
This paper studies the near term firm-level cumulative and non-cumulative responses to corporate tax shocks. Using a panel version of local projection with an instrument variable, I find that firms increase intangible and tangible investment, labor costs, and output, whereas decrease leverage. To the tax cut, measured firm revenue productivity and measured markup increase, but firm churn is stable to the tax cut. I furthermore document that cumulative change is more persistent than non-cumulative change. Extrapolating our estimates, I predict that the effect of the 2017 Tax Cuts and Jobs Act is significant.