"The Geoeconomics of Imports: Evidence from the UN Security Council Elections" with Jing Wu
This paper examines how trade functions as U.S. geoeconomic statecraft and why certain firms follow the flag. Exploiting elections to the United Nations Security Council (UNSC), we show that U.S. public firms increase imports from a country by 16 percent when it rotates onto the council. This increase is unique to the U.S. relative to comparable developed countries without permanent UNSC membership and is concentrated in products where elected countries lack comparative advantage, reflecting strategic reallocation of U.S. imports rather than improvements in exporter economies. Consistent with geopolitical motivations, the effect is concentrated among swing countries and is more pronounced when the elected country holds greater agenda-setting power. We identify two channels of import politicization: policy concessions and rent-seeking by firms. First, imports from newly elected countries face lower duty rates despite unchanged trade costs and prices, and federal procurement shifts toward their contractors and products. Second, the increase is disproportionately driven by firms whose top lobbying issues are overseen by senators who serve concurrently on the Foreign Relations Committee, with the effect increasing in senator seniority. These firms exhibit lower operational efficiency but higher subsequent valuations. Finally, countries with larger import increases during their UNSC terms exhibit greater voting alignment with the U.S.
"From Extra-budgetary to Budgetary: Public Debt Recognition and Private Sector Responses" with Stella Park and Heng Yue
We examine how recognizing government debt on official budgets affects private sector investment. We exploit China's 2014 fiscal reform, which mandated local governments to transition from extra-budgetary (off-balance-sheet) to budgetary (on-balance-sheet) debt financing. Using a difference-in-differences design, we compare firms in cities with high versus low pre-reform implicit debt. We find that treated firms increase investment by 0.8 percentage points of total assets (14% of the mean) relative to control firms. This effect operates primarily through a monitoring channel: Enhanced oversight constrains government borrowing, expanding credit access for private firms. Consistent with this mechanism, treated firms increase leverage by 1.5 percentage points, concentrated in long-term loans. The investment increase is larger for financially constrained firms and firms with lower accounting quality, and smaller for firms more reliant on government support or more exposed to local consumption. Treated firms also increase employment by 9.3%, particularly hiring workers with higher education and technical skills. Our findings demonstrate that public debt recognition generates real economic effects by reallocating credit from the public to the private sector.
"LIFO and the Muted Response to Inflation Expectations" with Hanwen Xu and Heng Yue
This paper examines how inventory accounting regimes shape firms’ responses to macroeconomic conditions under incomplete contracts. We first show that the positive association between inflation expectations and inventory levels reflects hedging incentives: the relation is stronger among firms facing greater output price rigidity and weakens after the introduction of steel futures. Consistent with this mechanism, stockpiling enhances firm performance and stabilizes sectoral prices. We then show that the Last-In, First-Out (LIFO) method significantly dampens this response. Because LIFO expenses the newest inventory first, stockpiled units remain unexpensed absent liquidation—weakening the link to short-term earnings and compensation. LIFO firms thus exhibit lower inventory sensitivity despite greater earnings exposure to future inflation. This attenuation is more pronounced among firms with larger LIFO reserves, consistent with LIFO liquidation offering an alternative earnings cushion. Using Section 301 tariffs as an exogenous shock to inflation expectations, we observe front-loading only among non-LIFO firms.
"Monetary Policy and Trade Credit" with Weikai Li, Zhaogang Song and Jing Wu
Trade credit — roughly three times the size of bank loans — is a critical yet underexplored channel of monetary policy transmission. We study this channel using a novel dataset from Dun & Bradstreet's Global Trade Exchange, which provides monthly firm-level payment records disaggregated by payment timeliness. We find that contractionary monetary policy surprises significantly increase trade credit, driven predominantly by customers delaying payments beyond contractual terms, particularly in long-overdue accounts, and to a lesser extent by expanded within-term provisions. Cross-sectionally, trade credit responses are stronger among firms with higher growth options, tighter financial constraints, and better information environments, consistent with trade credit serving as substitute financing when bank credit tightens. We further show that the ex ante level and structure of trade credit explain cross-sectional variation in stock price reactions to monetary policy announcements. Our findings establish supply-chain credit as a significant margin of adjustment through which firms absorb monetary policy shocks.
"CECL and the Transmission of Monetary Policy" with Oliver Binz, Ally Lin and Matthew Phillips
"Data Centre Tax Incentives of ESG" with Gunchang Kim, Shaphan Ng and Rencheng Wang
"Value of Open Data: Evidence from China’s Land Transaction Market" Solo-authored