Research

Collaboration in Technology and Multinational Production  (JMP)

Abstract: How does technology sharing affect global production choices? To answer this question, I incorporate technology choices into a structural multinational production model and allow for collaboration in specialized assembly assets across firms when choosing the optimal production locations for their varieties. I find that both the technology choice itself and the potential sharing of it have important effects on the expected cost and profits of firms. Conditional on technology choices, the median firm's cost of serving a market increases by 24.65% compared to traditional models that do not model input technology. On the other hand, allowing for collaboration reduces their cost by 2.9%, with large firm heterogeneity. Importantly, the model allows for analysis not only of trade policy shocks but also of industrial policies. While restricting technology access has limited global effects, it creates significant production consequences for specific firms and countries, highlighting industrial policy as a more targeted tool than trade policy.

The U.S.-China Trade War and the Geography of Global Production, with Harald Fadinger, Jan Schymik & Lei Li

Abstract:  We combine detailed information on global plant-level activities and trade flows to study how trade protection during the period 2018-2022 has affected the geography of global production. We document that during the first phase of the U.S.-China trade war, trade protection strongly shaped the location of global economic activity. Firm entry, local employment, sales, and imports were substantially affected by rising tariffs, and responses varied along global value chains (GVC): industries that are more distant from final demand (more upstream) responded less sensitively to changes in protection. While imposed tariffs on outputs increased local economic activity, tariffs on inputs dampened economic activity, and both effects were starkest in more downstream industries. Furthermore, the U.S.-China trade war had significant global spillover effects on firm entry, sales, and employment in third countries, with most of this adjustment happening due to reshuffling of sales of multinational companies within their  affiliate network.   In particular,  U.S. tariffs on China, or Chinese tariffs on inputs sourced from the U.S. prompted Chinese multinational firms to relocate production abroad, benefiting third countries in terms of local economic activity. These effects were stronger in more downstream sectors. By contrast, China's tariffs on the U.S. or U.S. tariffs on Chinese inputs  had negative third-country effects on local economic activity via trade diversion.