Dongkeun Choi
Thank you for visiting my website! I am a PhD Candidate in Economics at UC San Diego.
My research focuses on macroeconomics, monetary economics, and financial institutions.
I am visiting the Federal Reserve Board as a Dissertation Fellow this summer and am on the job market in 2026–2027.
Curriculum Vitae: CV
Email: dochoi@ucsd.edu
Job Market Paper
Unintended Risks of Bank Capital Regulations
[Abstract] I show that tighter capital regulation can increase aggregate credit risk when banks and nonbank financial intermediaries (NBFIs) coexist. Using loan-level mortgage data, I document that NBFI loans exhibit higher default rates than bank loans, with the gap arising from NBFIs’ looser underwriting standards. Using regional variation in regulatory exposure, I show that tighter bank capital requirements shift credit to riskier borrowers and increase default rates. To quantify the effect of regulation on aggregate credit risk, I develop a general equilibrium model where each sector chooses loan rates and underwriting standards. Tighter requirements induce banks to increase loan rates and lower approval rates. More applicants shift to NBFIs, and their looser screening extends credit to riskier applicants whom banks would reject, increasing the aggregate default rate. An NBFI underwriting requirement can serve as a complementary policy that mitigates the credit risk induced by tighter capital requirements.
[Abstract] The falling relative price of equipment, long viewed as the signature of investment-specific technological change (ISTC), has a countervailing force: rising structures prices. We establish four facts: high-income countries' structures prices rise as equipment prices fall; each investment rate falls with its own price; equipment prices predict income growth more strongly than structures prices; and U.S. structures price rises are broad-based. KLEMS data attribute roughly half the post-1996 rise in construction prices, in the U.S. and abroad, to declining construction TFP. We build a two-capital endogenous growth model with structures in production and R&D. Calibrated to the U.S., structures impose a structural drag of 0.50 percentage points per year, partially offsetting a 1.32 percentage point equipment boost. A nested CES extension finds structures-unskilled substitutability alongside equipment-skilled complementarity. These margins shrink the drag by 20-30% and reveal a novel channel whose omission overstates the 1963-2019 U.S. skill premium rise by 30%.
Selected Work in Progress
Why Is Monetary Policy Less Effective at Low Interest Rates: The Role of Banking Sector
[Abstract] This paper investigates the effectiveness of monetary policy in a low-interest-rate environment, focusing on how loan and deposit rates respond to changes in nominal interest rates. Using U.S. bank data, I show that deposit rates reach zero when the policy rate falls to roughly 2 percent, after which loan rates no longer respond to further cuts. Net interest margins do not shrink, preserving banks' equity and lending capacity. Monetary transmission thus weakens well above the zero lower bound, muting the stimulus to loan demand rather than eroding banks' lending capacity. Stabilizing demand-driven recessions near this threshold requires earlier fiscal coordination.
Redistribution from Safe to Risky Borrowers through the Secondary Mortgage Market
[Abstract] This paper investigates how a relaxation in GSE purchase and underwriting rules can redistribute credit from safer to riskier borrowers through the secondary mortgage market. Exploiting the 2017 removal of additional documentation requirements for high-DTI mortgages, I show that ex post default rates increase among affected borrowers, while interest-rate spreads respond only modestly. This muted price adjustment suggests that lenders do not fully incorporate the DTI-induced deterioration in credit risk into loan pricing. The combination of expanded high-DTI acquisitions and incomplete risk-based pricing implies a reallocation-subsidy mechanism. When secondary-market pricing is imperfectly risk-adjusted, expanded purchase eligibility reallocates GSE credit toward riskier borrowers without commensurate increases in fees, shifting a larger share of expected losses onto safer segments within the pooled GSE system. I quantify the resulting increase in expected credit losses borne by the GSEs, decompose it into composition and performance components, and highlight the importance of a secondary-market pricing framework that more fully reflects borrower risk.