Working Papers

"Benchmark Index Inclusion and Sovereign Risk", 2025

Abstract: Rising global capital flows intermediated by investment funds that replicate benchmark indices—the returns of a basket of eligible assets—have raised financial stability concerns. I exploit variation in benchmarks used by investors holding bonds from the same issuer to estimate the causal effect of adding a country’s debt to benchmark indices on bond price volatility. Using micro-level data on government debt from emerging economies, I show that index inclusion insulates bond prices from changes in fundamental risk, reducing volatility. On the borrower side, benchmark inclusion encourages borrowing as the level of demand for a country’s bonds rises. However, the dampening effect of inclusion on the elasticity of demand for the bond has a countervailing impact. I develop and estimate a structural model with benchmark-driven demand and endogenous asset supply. The level effect on demand dominates, indicating that an increased supply of index-eligible assets contributes to volatility. 

“Could Tariffs Provide a Stimulus? Simple Analytics of Tariffs and the Macro Economy”, 2025

Abstract: This paper shows that tariffs may stimulate demand when nominal frictions are present. While tariffs in small open economies depress consumption under PPI-targeting monetary policy, tariffs can in principle stimulate demand when monetary policy accommodates producer price inflation, such as under CPI targeting, the fiscal determinacy of the price level, and inactive monetary policy. Unless production uses inputs, inflationary tariffs in the world economy depress global demand even at the world liquidity trap. Even if consumption and terms of trade achieve the first-best outcome under strict PPI targeting monetary policy, optimal monetary policy—which still needs to address input-demand inefficiency—can be either expansionary or contractionary relative to a strict PPI targeting rule, depending on input shares. 

“Tariff Pass-through at the Dock and at the Store”, 2021

Abstract: This paper explains a high pass-through of US tariffs at the dock and a low pass-through at the store in general equilibrium in the US-China trade war in 2018. Using a model with costly distribution of traded goods and nominal frictions faced by producers and retailers, this paper demonstrates that a two-country model without retail-level nominal frictions cannot explain the low pass-through at the store quantitatively. A model with only producer-level nominal frictions requires unrealistically high distribution costs to match the data. Strategy complementarity exists for vertically related firms: exogenous tariff shocks increase downstream retail prices and create incentives for upstream producers to increase their prices. This strategic interaction boosts the tariff pass-through at the dock and helps the model to match the data.    

Other Works

“Tariffs and the Macroeconomy” with Katheryn Russ and Sanjay Singh. Oxford Research Encyclopedia of Economics and Finance, July 2023.