In the past three decades, international business cycles have become highly synchronized across countries. However, there is a lack of consensus on whether this is due to an increase in the correlation of country-specific shocks or due to increased economic integration. To understand this empirical phenomenon, I develop a multi-country real business cycle model with international trade that captures several potential explanations: shocks to productivity, demand, leisure, investment, sectoral expenditures, and trade-linkages. Then I match the data exactly with the endogenous outcomes of the model so that shocks fully account for the data, including GDP and trade shares. Calibrating the model to a panel of developed (G7) countries during 1992-2014, I find that trade-linkage shocks, which capture increased economic integration and the volatility of trade flows, are essential in synchronizing international business cycles. In contrast, correlated country-specific shocks play relatively minor roles. This suggests that trade shocks due to economic integration have been the primary driver of the co-movement of international business cycles. Furthermore, I use my model to address the trade co-movement puzzle, which states that international real business cycle models should be predicting a much stronger link between trade and cross-country GDP correlations. Once I account for the trade-linkage shocks, the model predicts a strong link between trade and business cycle co-movement. This finding suggests that incorporating the dynamics of trade shocks is crucial when studying international business cycles.
WORK IN PROGRESS
"Global and Local Effects on the Labor Share Decline" - with Han Yang
"Intra-household Inequality and Gender-Equitable Inclusive Growth" - with Gee Young Oh
"Disentangling the Impact of Trade and Financial Sanctions: Evidence from Iran" - with William Walsh
Controlled School Choice with Mixed Bounds Approach: A Balance between Stability and Diversity Considerations (B.S. thesis at Carnegie Mellon University)
Controlled school choice over public schools has been an important concern for both the parents of students and schools. It gives numerous options for how fairness and diversity considerations can be balanced. The notion of diversity is often imposed by limiting the number of admitted students who have the same type (quotas), or by reserving seats for each student type (reserves). The controlled school choice rule that I explore in this paper is the combination of “reserves” and “quotas,” where schools implement minimum reserves (a soft bound) and maximum quotas (a hard bound) together. In this paper, I provide a full characterization of the mixed bounds approach, and show that it satisfies the requirements for the existence of a student-optimal stable matching.