Research Projects
Quantifying the Effects of Commodity Booms on Regional and Sectoral Outcomes
Abstract: I examine how commodity booms affect regional and sectoral outcomes in exporting countries, using Indonesia’s palm oil boom as a case study. I first estimate the local effects of a large resource demand shock using plausibly exogenous variation in regional suitability for oil palm cultivation. I find that more exposed regions experienced faster employment growth driven by agriculture, while non-commodity manufacturing industries experienced declines in sales and labor productivity. Motivated by these findings, I develop a dynamic multi-sector spatial equilibrium model with migration, sectoral linkages, agglomeration economies, and dynamic externalities in manufacturing. I calibrate the model to the Indonesian economy and use it to simulate counterfactual economies without commodity export shocks. The results show that while the boom raises aggregate GDP during the boom period, it reduces welfare and leads to a long-run contraction in manufacturing, particularly in more industrialized regions. I also find that agglomeration economies amplify the short-run gains from the boom, while dynamic externalities worsen the long-run losses by slowing productivity growth in manufacturing. The findings suggest that commodity booms may hinder long-run industrialization in resource-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.
