Research Projects
Quantifying the Effects of Commodity Booms on Regional and Sectoral Outcomes
Abstract: Commodity demand shocks in the global market can have persistent effects on economic outcomes of commodity-exporting countries. In this paper, I study the regional and sectoral effects of commodity booms. To quantify the aggregate and regional effects of commodity booms, I develop a dynamic spatial equilibrium model that accounts for sectoral linkages, internal migration, and externalities in manufacturing sectors. I calibrate the model to the Indonesian economy and simulate the response to the commodity boom that the country experienced in the 2000-2011 period. First, I find that while the commodity boom increases aggregate GDP during the boom period, it reduces long-term welfare. Second, the impact is heterogeneous across regions. While the lagging regions gain from the commodity boom, industrialized regions experience a decline in employment and GDP. The surge in commodity exports leads to a decline in manufacturing GDP in both regions. Third, I also show that dynamic externalities in manufacturing can amplify the long-term effects of commodity booms on manufacturing GDP. Overall, the counterfactual analysis indicates that commodity booms can significantly alter the spatial distribution of economic activities and may hinder industrialization in commodity-exporting countries.
Firm Responses to Industrial Policy: Evidence from Local Content Requirements
Abstract: I study the effects of industrial policy on firm-level outcomes. Specifically, I examine the impact of a local content requirements (LCR) policy in the telecommunications sector. These requirements mandate that firms in targeted sectors source a minimum share or specified type of domestically produced inputs. To identify causal effects, I exploit cross-plant variation in exposure to the LCR policy in the telecommunications sector. I measure plant-level exposure based on the share of LCR-targeted products in each plant's output. To mitigate endogeneity concerns, I use pre-policy data from 2006 as firms may have adjusted their product mix in response to the LCR policy. I then use a Two-Way Fixed Effects (TWFE) model and a dynamic extension of the TWFE model to examine both static and dynamic effects. While the policy is intended to promote local sourcing, the results suggest it has no significant impact on firm sales. Firms tend to experience higher labor costs and a decline in labor productivity. There are short-term positive effects on employment among upstream firms, but these effects do not last in the long run.
The Impact of Resource Demand Shocks on Manufacturing: Evidence from Plant-Level Data
Abstract: I estimate the impact of palm oil demand shocks on manufacturing firms in Indonesia, using plant-level data from 2000 to 2015. To identify regional shocks, I apply a shift-share design that exploits district-level variations in potential crop yields. I find that the palm oil boom positively affects the vegetable oil industry in regions with high exposure to the boom. To investigate potential crowding-out effects in the input market, I construct a measure of input similarity based on input-output data at the sector level. During the boom, firms in the sectors that use inputs similar to those in the vegetable oil industry experienced slower growth in both sales and labor productivity. These effects persist even after the boom period ends. The results remain robust after controlling for firms that use inputs from the vegetable oil industry. Overall, my findings suggest that the palm oil boom leads to crowding-out effects in the intermediate input market.
