Research

Job Market Paper

The Unintended Consequences of Financial Sanctions

Presented at USC Marshall PhD Finance Conference 2022 (Best Paper Award), Young Economist Symposium 2022, LBS Transatlantic Doctoral Conference 2022, Columbia Business School 2022

Recipients of Smith Richardson Foundation World Politics & Statecraft Fellowship 2022, Chazen Research Grant 2021, Deming Center Doctoral Fellowship 2021

Abstract: This paper studies the economic impact of the U.S. financial sanctions against Russian companies in the aftermath of Russia’s annexation of Crimea in 2014. It shows that this sanctions program, which primarily cut off access to international financial markets for sanctioned companies, produced an unintended consequence of strengthening the sanctions targets relative to their unsanctioned peers. Specifically, while the policy successfully halted new international borrowings by sanctioned companies, the spillover impact of the policy resulted in these targets shrinking in size by less than unsanctioned Russian firms. To explain the results, I propose a heterogeneous firm model with segmented capital markets and financial frictions in which sanctions against international borrowers led to credit rationing among domestic borrowers. This research highlights the limitation of “targeted sanctions,” identifies factors for policymakers to consider in calibrating future programs, and proposes policy alternatives. It also suggests broader implications on the impact of international financial integration and capital flows on firm size dynamics.

Working Paper

The Impact of Monetary Policy on the Specialness of U.S. Treasuries

Abstract: I estimate the causal effect of monetary policy on the specialness of U.S. Treasuries. Measuring this specialness using the U.S. Treasury Premium, which is the difference in the convenience yield of U.S. Treasuries and that of government bonds of other developed countries measured as the deviation from covered interest parity between government bond yields, I find that monetary tightening by the Federal Reserve increases the specialness of U.S. Treasuries primarily by increasing the convenience yield of U.S. Treasuries. I also find that the magnitude of the impact varies across the term structure and across countries, especially after the GFC, and U.S. and foreign monetary policy shocks have asymmetric impacts on the specialness of U.S. Treasuries. These results provide evidence for the unique ability of the Federal Reserve to affect the specialness of U.S. Treasuries by altering the supply of dollar safe assets.

Work in Progress

Patterns of Foreign Equity Holdings and International Portfolio Diversification (with Amanda Dos Santos)

Sovereign Borrowing with State and Private Creditors (with Jesse Schreger)

Others

Preparing for Blockchain, Center for Technology, Society, and Policy, University of California at Berkeley, 2017