Research
The opinions expressed on this website and in my research and talks are mine and do not necessarily reflect those of the International Monetary Fund (Washington, D.C.).
The opinions expressed on this website and in my research and talks are mine and do not necessarily reflect those of the International Monetary Fund (Washington, D.C.).
Working papers
The Effects of Subsidies Along Supply Chains (Job Market Paper)
Best Graduate student paper at the 2023 SETC Conference, FREIT.
Finalist at UNCTAD-AIB 2022 Award for Research on Investment and Development.
The increasing use of industrial policy by governments worldwide raises concerns about their trade implications. In this paper, I study the effects of US politically motivated subsidies on exports, both directly (in subsidised industries) and indirectly (in industries connected through domestic input-output linkages). To this end, I use a unique dataset on federal subsidies introduced by the United States since 2000. I first document a lack of transparency: despite multilateral trading rules, only a minority of these subsidies are notified to the WTO. To identify the causal effects of subsidies on exports, I exploit exogenous political shocks driven by changes in the identity swing states across electoral terms. Politically motivated subsidies foster exports in industries directly and indirectly exposed to them. Contrary to WTO case law, which typically associates indirect subsidies with price suppression, these subsidies increase producers and input prices. Additionally, they spur investment in subsidised industries and lead to productivity gains in vertically connected industries. This analysis contributes to the ongoing debate on reforming multilateral trading rules on subsidies by highlighting the need for greater transparency and a broader understanding of how subsidies spill over along supply chains.
Stock Market Response to Firms’ Misconduct
Labour rights violations and environmental challenges have caused companies to come under increasing society’s pressure to achieve higher sustainability standards. Using a novel dataset of worldwide industrial disasters and companies allegedly involved in them, I examine whether large companies suffer systematic stock market losses after disasters. I estimate an average drop in price returns of 1.47 percentage points on the day after the disaster and 3.21 over one week. Accordingly, volatility soars. I then discuss the possible mechanisms behind this negative market response. I focus on harm to the reputation for sustainability, and I examine the media’s attention to environmental and labour topics through a sentiment analysis of disaster-related news. I find that a more negative tone of the news is associated with larger stock market losses.
Under the Spotlight: CSR Choices and Fragile Supply Chains (with Flavia Cifarelli)
With the growing interest of civil society in socially responsible value chains, firms face the challenge of verifying compliance with working and environmental standards by their international suppliers. In this paper, we study the firm's choices in determining monitoring efforts and its number of suppliers. We model firms' trade-off in choosing the size of their global supply chain and the intensity with whom they monitor their suppliers. Larger supply chains are more resilient to violation shocks, because the cost of replacing a supplier is lower in large networks. However, they are inherently more expensive to monitor. We find that the optimal intensity of monitoring efforts depends positively on the probability of a boycott and negatively on the cost of changing suppliers if violation is found. We provide empirical evidence supporting the theoretical predictions of the model. Using sector-level data on imports, child labour incidence, and NGO campaigns, the paper suggests that the network's size decreases with increasing societal attention and a higher proportion of clean suppliers in the economy.
Work in progress
Lobbying and Counter-Lobbying on Trade Protection (with Paola Conconi, Aksel Erbahar, and Lorenzo Trimarchi)
We study lobbying in favour of and against the most widely used trade barrier – antidumping (AD) duties. We combine detailed information from lobbying reports filed under the Lobbying Disclosure Act with data on US AD duties and ITC hearings to construct a unique dataset that allows us to identify all firms that lobbied on US AD petitions and sunset reviews during 2008-2020. We document lobbying efforts in favour of AD protection (by import-competing US firms) and against it (by US downstream firms and foreign firms targeted by the duties). We study the effects of these efforts on antidumping policy outcomes. We use an instrumental variable approach to address endogeneity concerns, exploiting exogenous changes in the political connections of “potential lobbyists and counter-lobbyists” with members of the key trade committees in Congress.
A Study of US State Subsidies
Many subsidies in the United States are granted by state authorities. I exploit a particular feature of the US budgetary system to identify the causal effects of state subsidies on domestic and foreign direct investment. The identification strategy leverages exogenous variation in the Balanced Budget Requirements of US states and adjustments in their public made when faced with unexpected general funds’ deficits.
Lobbying Against Free Markets: The Political Economy of Rising Concentration in US Markets (with Marco Grotteria, Lorenzo Trimarchi, Daniele Verdini)
Over the past three decades, competition in US markets has been declining. In this paper, we investigate the impact of political activism by major corporations on the increase in industry concentration and rising market power. We build a novel dataset that combines detailed information on all US competition policy cases and related firms’ lobbying activities. We use this dataset to provide insights into the influence of lobbying and political connections in shaping the increasing industry concentration and rising market power in the United States.