Job market paper

[NEW VERSION!] Multinational Production and Global Shock Propagation during the Great Recession, [NEW] SSRN, CESifo WP, talk at VITM PhD workshop (video). Revise and Resubmit at the Journal of Monetary Economics

Winner of the RoWE Young Economists Prize at the 22nd European Trade Study Group (ETSG) Annual Conference

Abstract: I investigate multinational production (MP) patterns during the Great Recession and their impact on trade and shock transmissions across countries. Addressing the "Multinationals' Resilience Puzzle" -- which questions why multinational enterprise (MNE) sales were more resilient than domestic counterparts in an average country yet MP's share in global GDP decreased -- I find that larger countries faced greater MP declines and high MP intensity countries saw larger GDP drops. These patterns can be explained by adverse MNE productivity shocks in major economies that propagated to their MNEs elsewhere and reduced GDP in MP intensive countries. To quantify the spillover effects, I develop a model of MP, sectoral linkages, and global value chains. The model shows that, considering MNEs' involvement in trade, supply-side productivity shocks contributed almost as much to world total trade decline as demand shocks. MNE shocks had a more significant impact on cross-country trade variations compared to demand shocks. MP linkages amplified productivity shocks from key headquarters countries on global MP, trade, and welfare, highlighting the importance of productivity shocks and their propagation through MNEs in understanding the "Multinationals' Resilience Puzzle".

Working papers

The Employment Consequences of Anti-Dumping Tariffs: Lessons from Brazil, with Gustavo de Souza, SSRN. Revise and Resubmit at the Review of Economics and Statistics

Abstract: Can anti-dumping tariffs increase employment? To answer this question we compile data on all anti-dumping (AD) investigations in Brazil, matched to firm-level administrative employment information. Using difference-in-differences, we estimate the effect of AD tariffs on trade, the national supplier and sectors linked to it. As response to an AD tariff, imports decrease while the protected sector increase employment. Moreover, downstream firms decrease employment by more than the employment gain of the national producer while upstream ones dramatically increase it. To quantify the aggregate effect of these tariffs, we build a quantitative model with international trade, input-output linkages and labor force participation. The model can reproduce the micro-elasticities we found and aggregate moments of the Brazilian economy. We show that the Brazilian AD policies increased employment by 0.04%, GDP by 0.04%, but decreased welfare by 0.09%. 

[NEW VERSION!]  We Are All in the Same Boat: Cross-Border Spillovers of Climate Shocks Through International Trade and Supply Chain, with Alan Xiaochen Feng, and Yulin Wang, CESifo WP, IMF WP

Revise and Resubmit at the Economic Journal

Abstract: Are land locked countries subject to sea-level rise risk? We highlight a new mechanism by which physical climate shocks affects countries’ macro-financial performance: the cross-border spillover effects that propagate through international trade. Basing our findings on historical data between 1970 and 2019, we find that climate disasters that strike the transport infrastructure – ports – decrease the affected country’s imports and exports and reduce economic output in major trade partner (both upstream and downstream) countries. Climate disasters reduce stock market returns in the aggregate market and tradable sectors of the major trade partner countries. Exposures to foreign long-term climate change risks reduce the asset price valuations of the tradable sectors at home. As a result, climate adaptation efforts in one country can have a positive impact on macro-financial performance and stability in other countries through international trade.

[NEW PAPAER!] Robots, Tools, and Jobs: Evidence from Brazilian Labor Markets, with Gustavo de Souza, Chicago Fed WP

Abstract: What is the effect of robots and tools on employment and inequality? Using natural language processing and an instrumental variable approach, we discover that robots have led to a sizable decrease in the employment and wages of low-skill workers in operational occupations. However, tools — machines that complement labor — have led to an equally large reinstatement of these workers, increasing their employment and wages. Using a quantitative model, we find that the lower prices of robots and tools over the last 20 years have reduced inequality and increased welfare without a significant effect on employment.

[NEW PAPAER!] To Comply or Not to Comply: Understanding Developing Country Supply Chain Responses to Russian Sanctions, with Zhi Li, Ziho Park, Yulin Wang, and Jing Wu, SSRN

Abstract: How do firms in neutral developing countries adjust their supply chains in response to geopolitical and economic fragmentation? Do they comply with or circumvent Western sanctions on Russia? Using comprehensive transaction-level bill of lading data from major developing countries, we study these questions in the context of the Russo-Ukrainian War. We find that firms in non-sanctioning countries significantly reduced exports of sanctioned products to Russia (and Belarus) if their headquarters are located in sanctioning countries (i.e., sanctioning MNEs), highlighting MNEs’ role in propagating sanctions globally. Domestic firms in developing countries observed a relative increase in such exports, weakening the effect of Western sanctions. Sanctioning MNEs expanded exports of sanctioned products to both sanctioning and Russia-friendly countries, indicating a blend of compliance and non-compliance. Sanctioning MNEs significantly reduced imports from Russia (and Belarus) in financially risky sectors, consistent with the effect of financial sanctions. To strengthen the effectiveness of sanctions, sanctioning countries should use their MNE networks, induce domestic firms in neutral countries to comply, and prevent sanction avoidance of MNEs through indirect exports.

Publications

(Trade) War and Peace: How to Impose International Trade Sanctions, with Gustavo de Souza, Naiyuan Hu, and Yuan Mei, Journal of Monetary Economics, journal link, WP, SSRN

The Life-Cycle Dynamics of Exporters and Multinational Firms, with Anna Gumpert, Andreas Moxnes, Natalia Ramondo, and Felix Tintelnot, Journal of International Economics, September 2020, journal link 

Hedging House Price Risk in China, with Jia He and Jing Wu, Real Estate Economics, January 2016, journal link

Work in progress

First and Second Order Approximation Methods for Counterfactual Predictions in International Trade Models, with Yuan Mei