Moving into Risky Floodplains: The Spatial Implications of Federal Disaster Relief Policies (with Xinle Pang) (Oct, 2026) New Draft!
Journal of the European Economic Association, Revise and Resubmit
Abstract: This paper develops a quantitative dynamic spatial general equilibrium model to evaluate the welfare effects of U.S. post-disaster relief policies under flood risk. Relief transfers insure residents of flood-prone areas, but they also draw population into those areas and create a fiscal externality. We calibrate the model to the impacts of Hurricane Harvey in Texas. To address the curse of dimensionality, we solve the model globally by approximating value functions with a neural network, which allows the solution to capture the insurance value of relief under aggregate risk. Removing relief transfers lowers the floodplain population share by 12.6%, yet reduces welfare both in Texas and in the rest of the U.S., as the insurance value of relief outweighs the fiscal externality. Expanding relief while charging each floodplain county an actuarially fair premium raises welfare in both regions. A moving subsidy that replaces current flood policies at the same expected fiscal cost raises aggregate welfare through relocation, but lowers welfare for those who remain in floodplains, who lose the insurance that current policies provide.
The Philosopher’s Stone for Science – The Catalyst Change of AI for Scientific Creativity (with Qian Chen, Yi-Jen (Ian) Ho, and Dashun Wang) (Apr, 2026) MIS Quarterly, Revision Request
Abstract: This study examines whether and under what conditions artificial intelligence (AI), including machine learning and algorithms, is associated with scientific creativity. Drawing on the Logical Creative Thinking (LCT) framework, we conceptualize creativity as a structured search process governed by two mechanisms: recombination, reflected in novelty, and replacement, reflected in disruption. Using publication and citation-network data from more than 21 million papers published between 2000 and 2019, we identify AI-in-use research based on abstract/title keywords and compare AI-in-use and non-AI papers using established measures of novelty and disruption. We find that, on average, AI-in-use papers are associated with higher levels of both novelty and disruption. However, these relationships vary across levels of creativity. For novelty, AI-in-use is positively associated with both mid-tier and top-tier novel work, with stronger gains in mid-tier research. For disruption, AI-in-use is primarily positively associated with top-tier disruptive work, suggesting that AI may reinforce conventional trajectories in mid-tier research while enabling paradigm-shifting contributions when deployed by visionary researchers. We further find substantial heterogeneity across fields: the association between AI-in-use and both novelty and disruption is stronger in analytically oriented fields, such as Basic and Applied Science, and weaker—and at times negative—in more interpretive domains, such as Social Science and the Humanities. Finally, different AI tool categories exhibit distinct patterns: machine perception and data retrieval tools are more strongly associated with novelty, whereas pattern recognition and predictive modeling tools are more strongly associated with disruption. Together, these findings advance understanding of AI’s role in scientific knowledge production by showing how AI can support both exploratory recombination and transformative change, with substantial variation across contexts.
Energy Chokepoints and Production Networks: The Distributional Incidence of a Strait of Hormuz Blockade (with Jinhu Jia, Zhen Sun, Luotong Zhang and Houwang Zhao) (Jun, 2026)
Abstract: Energy security has moved to the center of economic policy as geopolitical conflict, supply disruptions, technological transformation, and the climate transition have repeatedly tested the resilience of energy systems. We quantify the global welfare incidence of a complete Strait of Hormuz blockade using a multi-country, multi-sector quantitative trade model with input-output linkages. Under this setting, real GDP changes can be decomposed into three channels: a final-goods channel, an intermediate-goods channel, and an input--output linkage channel. Our simulation results show that Gulf energy exporters bear the largest welfare losses, ranging from 2.09 percent of real GDP for the United Arab Emirates to 7.48 percent for Iraq. For energy-intensive importing economies, the input--output linkage channel is the dominant transmission mechanism: it accounts for nearly 90 percent of Japan's welfare loss and exceeds the total welfare loss of Korea. China and the United States, despite large bilateral Gulf energy flows, experience near-zero real GDP effects because diverse supplier relationships dampen all three channels. These results imply that relying on bilateral energy import shares alone would understate true Hormuz exposure for production-network-embedded economies, and that effective energy-security policy should also address the indirect channel that conventional strategic reserves cannot reach.
Who Gains from Multinational Production? A Quantitative Analysis of the Expenditure Channel (with Yuwan Duan, and Yue Liu) Draft Coming Soon!
Abstract: This paper investigates how multinational production shapes consumption inequality across and within countries. We develop a quantitative general equilibrium model featuring consumers with non-homothetic preferences over goods produced by multinational firms. The model captures the idea that foreign-affiliated varieties differ in quality and accessibility across income groups, leading to unequal welfare gains from globalization. To quantify these mechanisms, we estimate the key parameters governing non-homothetic demand using aggregate bilateral FDI data, exploiting cross-country and sectoral variations in multinational presence. The estimated model incorporates input–output linkages and explicitly distinguishes between sectoral goods used for final consumption and those serving as intermediate inputs. Counterfactual exercises reveal how changes in the global structure of multinational production—such as shifts in FDI patterns or trade costs—affect inequality through both price and composition effects. The results highlight a novel channel through which multinational activity contributes to consumption inequality, complementing existing evidence on its role in income disparities.