Research
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 effects. In this paper, I study the effects of US federal subsidies on exports, both direct (in subsidised industries) and indirect (in industries connected through input-output linkages). To this end, I use a unique dataset on all federal subsidies introduced by the United States since 2000. I document that, against multilateral trading rules, only a fraction of these subsidies are notified to the World Trade Organization (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. I find that politically motivated subsidies foster exports in industries directly and indirectly exposed to them. Employment also increases. Contrary to the WTO case law jurisprudence, the positive effects along supply chains stem from increased investments rather than price suppression. My analysis contributes to the ongoing debate about reforming multilateral trading rules on subsidies by advocating enhanced transparency and a broader interpretation of the pass-through of subsidies to price.
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 in 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 the number of suppliers. We delve into the theoretical trade-off between larger and more resilient supply chains, which are inherently more expensive to monitor. 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.