Research

ARTICLES IN PEER-REVIEWED JOURNALS

Labor Market Effects of Monetary Policy across Workers and Firms. European Economic Review, Volume 166, July 2024, 104756  (with A. Gulyas and M. Meier) 

Abstract: This paper uses Austrian social security records to analyze the effects of ECB monetary policy on the labor market. Our focus is on the role of worker and firm wage components, defined by an Abowd et al. (1999) wage regression. We find that monetary tightening causes the largest employment losses for low-paid workers who are employed in high-paying firms before the tightening. Monetary tightening further causes a reallocation of workers to lower-paying firms. In particular low-paid workers who were originally employed by low-paying firms are prone to falling down the firm wage ladder.

Resource misallocation and manufacturing productivity: The case of Ukraine. Journal of Comparative Economics, Volume 44, Issue 1, February 2016, Pages 41–55

Abstract: Applying Hsieh and Klenow (2009) methodology, and using the dataset of 47,497 unique establishments over the period of 2002–2010, I investigate the effects of resource misallocation on the productivity of Ukrainian manufacturing. Empirical results show that there is a significant resource misallocation in Ukrainian manufacturing. If it were the case that all market distortions were eliminated, manufacturing productivity could triple, whereas if Ukraine was as distorted as the US or EU, it could be twice more productive than it is now. The results also show that most enterprises should downsize their level of production and that the major reallocations of resources occur among the most and the least productive enterprises.

WORK IN PROGRESS

Financial Frictions, Markups, and Unilateral Trade Liberalization (with A. Tarasenko and V. Vakhitov) (slides ETSG 2024)

Abstract: We study a response of a small open economy with credit constraints and variable markups to unilateral trade liberalization by a more developed trading partner. We use a dynamic heterogeneous agents model based on Kohn et al. (2020) to quantify the welfare and allocative efficiency effects of enacting Autonomous Trade Preferences by the EU countries for Ukraine in 2014 year. To obtain a better match with the data, we allow for variable markups in the domestic market, endogenous trade imbalances, and interest rate increasing with the level of foreign debt. We find that better market access improves welfare but lowers allocative efficiency in the economy, as reduction in markup dispersion is too weak to offset increase in capital misallocation. Variable markups exacerbate worsening allocative efficiency in the presence of credit constraints.

Foreign Exchange Trading During World Cup Events (with L. Grimm, M. Melvin and F. Westermann) 

International Trade when Ports are Blocked (with O. Shepotylo) 

Firm Dynamics and Full-Scale War: Short-Run Adjustment 

OLD WORKING PAPERS

Crony Capitalism in Ukraine: Relationship between Political Connectedness and Firms' Performance.  2018. World Bank Policy Research Working Paper; No. 8471. (with O. Balabushko, O. Betliy, V. Movchan, R. Piontkivsky)

Abstract: This study combines firm-level data and data on politically exposed people to explore correlation between firms' political connectedness and their economic performance in Ukraine. First, it estimates the share of politically connected firms in Ukraine's economy. Second, the study looks at how different the performance of politically connected firms is from that of their nonconnected peers. The analysis finds that 2 percent of firms are politically connected, but they control over 20 percent of the total turnover and over 25 percent of the assets of all Ukrainian companies. Over the past two decades, politically connected firms used various channels to access economic rents: public procurement, subsidized loans, transfers from the budget, trade regulations that restrict imports, privileged access to state assets through privatizations, and beneficial tax regimes. There is a strong negative correlation between political connection and productivity. Politically connected firms are larger and employ more people, but they are less productive and grow slower in turnover and job creation. This may likely account for lower economic growth and less competitive economy.