Job Market Paper

"Sanctions and Misallocation. How Sanctioned Firms Won and Russians Lost."

Presented at LSE CEP International Workshop (2021), STEG Workshop - video (2021) , EBRD research seminar (2021), LSE STICERD workshop (2021), LSE Economic Geography workshop, Higher School of Economics, New Economic School, CEMFI, Bocconi Finance, St Gallen, HEC Lausanne, Political Economics of Conflict and Nation-Building conference, EEA-ESEM 2022, DENS conference, Centro Studi Luca d'Agliano "Global Challenges International Workshop", CEBA seminar, University of Konstanz, NBER Megafirms and the Economy, ESSIM-CEPR conference, Baltic International Conference (invited session on Trade and Sanctions), CEPR-PSE Policy Forum, NBER SI, George Washington University seminar, DEM Workshop on the impact of global trade shocks (University of Luxembourg), Joint Conference by Kiel Institute and CEPR in Geoeconomics (Berlin).

This paper shows the ineffectiveness of "smart" sanctions, one of the most popular international economic policies. Using a unique natural experiment of staggered firm-level sanctions against Russia in 2014-2020 and the data on over 600,000 Russian firms, I estimate the effect both on targeted firms and on the aggregate economy. Surprisingly, sanctioned firms on average gained 32% more capital inputs and 20% in revenue after sanctions compared to non-sanctioned firms, and not-yet sanctioned firms. Using additional data on subsidies, government contracts and loans, I find that this result is explained by the government protection of targeted firms. The responding government more than compensated for the negative sanctions shock. However, the aggregate economy suffered. Combining the causal estimates with three distinct heterogeneous firm models calibrated to the Russian economy, I estimate that the Russian TFP dropped up to 1% overall. The sanctioned firms were already too large and had too much capital prior to sanctions, and have gotten even larger due to the reallocation of resources by the government. Sanctions hurt the overall economy, but helped the very firms they intended to target.

Publications

"Planning ahead for better neighborhoods: long run evidence from Tanzania" with Guy Michaels, Ferdinand Rauch, Tanner Regan, Neeraj Baruah, and Amanda Dahlstrand. 

Journal of Political Economy (2021)

Africa’s demand for urban housing is soaring, even as it faces a proliferation of slums. In this setting, can modest infrastructure investments in greenfield areas where people subsequently build their own houses facilitate long run neighborhood development? We study "Sites and Services" projects implemented in seven Tanzanian cities during the 1970s and 1980s, and we use a spatial regression discontinuity design to compare greenfield areas that were treated (“de novo”) to nearby greenfield areas that were not. We find that by the 2010s, de novo areas developed into neighborhoods with larger and more regularly laid out buildings and better quality housing.

"Measuring urban economic density" with Vernon Henderson and Sebastian Kriticos. 

Journal of Urban Economics (2019)

At the heart of urban economics are agglomeration economies, which drive the existence and extent of cities. This paper estimates urban agglomeration effects, exploring simple and very nuanced measures of economic density to explain household income and wage differences across cities in six Sub-Saharan African countries. A key aspect of the work is that we define cities consistently across space based on fine scale density measures, in order to gauge the economic extent of the city. The evidence suggests that more nuanced measures of density, which attempt to capture within-city differences in the extent of clustering, do no better than a simple density measure in explaining income differences across cities. However, total population is a poor measure. We find large wage gains to being in denser cities in Sub-Saharan Africa, generally larger than such estimates for other parts of the world. We also find extraordinary household income gains to density that are far greater than wage ones. Such gains help explain the pull forces driving rapid urbanization in the region.

"Is high‐tech care in a middle‐income country worth it?" with Charles Becker.  

Economics of Transition (2016)

How much does a dramatic increase in technology improve healthcare quality in an upper middle‐income country? Using rich vital statistics on infant health outcomes, this study evaluates the effect of introducing technologically advanced perinatal hospitals in 24 regions of Russia on infant mortality during the period 2009–2013. A 7‐year aggregate panel dataset reveals that opening a perinatal centre corresponds to infant mortality reduction by 3.8 percent from the baseline rate, neonatal (0–28 day) mortality by 7 percent and early neonatal (0–6 day) mortality by 7.3 percent. We find that the perinatal centres help to save 263 additional infant lives annually, ranging from 3 to 25 lives in regions with different birth rates. However, we further find that an average cost per life saved is 52 million rb (or 2.6 million 2014 PPP USD), which is much higher than the cost of similar interventions in the United States.

Policy Reports

"Public Procurement Relationships in the Shadow of Trial: Evidence from Russia" with Gerhard Toews and Marta Troya-Martinez

"Military Conflicts, Sanctions, and International Trade" with Konstantin Egorov, Vasily Korovkin and Alexey Makarin (Funded by Swiss National Science Foundation, ~421'000 USD)