Work in Progress

Globalization Backlash and Political Capture

As an explanation of the recent backlash against globalization, I propose and empirically test a new theory leveraging the role of politcal capture. To do so, I build a new model which integrates the Heckscher-Ohlin framework with a variation of the Acemoglu and Robinson (2006) model of redistribution. The model shows that the absence of income redistribution policies, due to the winners of trade capturing political institutions, motivates trade losers to oppose traditional liberal parties in favor of protectionist parties. Conversely, in countries with uncaptured political institutions, trade losers can benefit from the gains from trade, diminishing their support for protectionist parties. I empirically test this prediction with a cross country difference in difference strategy and the gradual diffusion of air technology as an instrumental variable for trade openness. I find that, in countries experiencing an increase in trade between consecutive elections, the vote share of the protectionist party increases (decreases) when political capture is high (low). Results are corroborated at the electoral district level within 14 EU countries.

presented at: AMSE, LAGV, RIEF network, PSE trade summer school, ASSET, Trade Tea Seminar (Bocconi)

China Shock through the lens of Market Access, with Priyam Verma
We study how locations reacts to international trade shocks based on their economic geography. To do so, we derive a new and granular market access (MA) measure of local labor markets based on structural model of Caliendo, Dvorkin and Parro (2019). Differently from past measures, this MA is dynamic, more granular (region-sector) and accounts for Input-Output linkages. Using US as a lab, we estimate MA for 722 x 22 commuting zone-sectors using infrastructure maps to calibrate domestic trade costs. We obtain a structural relationship between wages, employment and MA which we aim to take to the data to study the general equilibrium effects of the China `shock'. To solve endogeneity issues, we build a model based instrument following Allen and Arkolakis (2023). As a counterfactual analysis, we plan to simulate Biden's infrastructure bill to quantify how much improved infrastructure can insure against trade shocks.

Presented at: AMSE (Ph.D. seminar)

Foreign aid and democracy: chinese aid vs world bank aid, with Vera Z. Eichenauer and Matteo Sestito