Research

Working papers

How large are the dynamic gains from trade? [Job market paper]

The recent dynamic trade literature has established that the dynamic gains are an additional and quantitatively large source of welfare gains from trade. However, this literature does not account for the decreasing returns to scale in R&D. In this paper, I extend a dynamic trade model with heterogeneous firms and knowledge spillovers to allow for decreasing returns to scale in R&D. By calibrating the model to match the U.S. economy, I quantify the dynamic gains from trade under alternative assumptions about the returns to scale in R&D. I find that the dynamic gains from trade are still quantitatively important when a realistic degree of decreasing returns is assumed. In particular, the model is able to generate total gains from trade that are 2.95 times larger than the static gains. Further, I explore numerically the interaction between firm entry, productivity growth, and welfare gains from trade, and conduct counterfactual exercises by varying trade costs and the R&D subsidy rate.

[Draft with Theoretical Appendix]

The effect of the fracking boom on non-durable consumer expenditure: evidence from the consumer scanner data

I use consumer scanner data to study the response of consumer expenditure to a localized income shock, induced by the fracking boom in the U.S. The identification strategy utilizes the spatial variation in location of geological resources and the variation in the timing of fracking boom in each fracking region. Using difference-in-differences and event study approaches, I find on average 4.4% quarterly increase in the household expenditure on non-durable goods in areas affected by fracking. To distinguish between the increase in real consumption and changes in prices, I construct the volume measure of consumer expenditure. I find no evidence of the effect of the shock on consumer prices. I also examine changes in composition of consumer baskets, and heterogeneous effects by age, income, and education.

[Draft available soon]

Localized effects of the China trade shock: is there effect on consumer expenditure?

The paper contributes to a vast literature on the effects of recent rise in Chinese import competition on the U.S. local labor markets. The previous literature has shown that higher imports cause higher unemployment and reduced wages in local labor markets that house import-competing manufacturing industries. This paper revisits these findings and examines whether the exposure of local labor markets to increased import competition has an impact on local consumer expenditure. Using household scanner data, I show that the effect of the China trade shock on changes in local non-durable consumer expenditure in nominal and real terms are not distinguishable from zero. Moreover, I show that, in the period of 2000 to 2007, the localized China trade shock had a weak effect on average wages and median household income at the commuting zone level, which may explain why I observe no effect on household non-durable expenditure.

[Draft available soon]

Work in progress

Price dispersion and shopping time: evidence from retail and consumer scanner data

Joint work with Saman Darougheh

Other

Derivation of the Melitz model with alternative numeraire

This note is created for educational purposes. Please, cite when using any parts of the document.

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