Research

1. Working papers and current research
2. Refereed research articles
3. Book chapters
4. Policy papers and technical reports

Working papers and current research

• Trade, Growth, and Product Innovation. (Job Market Paper)
  • (Trade, Growth, Structural Modeling) Can trade integration induce product innovation? I document that countries that joined the European Union (EU) started producing more product varieties, investing more in R&D, and trading more compared to candidate countries that did not join at a given horizon. Additionally, I show that a plausibly exogenous increase in market access increases the probability of a given country starting production of and exporting a given product. To rationalize this reduced-form evidence, I propose a new quantitative framework that integrates the forces of specialization and market size. This is a dynamic general equilibrium model of frictional trade and endogenous growth with arbitrarily many asymmetric countries that nests the Eaton-Kortum model of trade and the Romer growth model as special cases. Key results are analytical expressions to decompose: (a) gains from trade into dynamic and static components; and (b) growth and welfare into “Romer” and “Eaton-Kortum” parts. In this framework, the product innovation growth rate increases with higher market access. Finally, a quantitative version of the model suggests that: (a) the EU enlargement increased its long-run yearly growth rate by about 0.10pp; and (b) dynamic gains can account for between 65-90% of total welfare gains from trade.
  • Draft article.
  • Winner of the WTO Essay Award for Young Economists.
  • Presentations (past or scheduled): Latin American Meeting of the Econometric Society, 2024; European Trade Study Group, 2024 (Plenary Session); Midwest International Trade Meeting, July 2024 (Plenary Session); Elon University; Texas A&M University; São Paulo School of Economics - Fundação Getúlio Vargas; University of Chile; UCSD Macroeconomics Seminar; 2023 Southern California Graduate Conference in Applied Economics; UCSD Global Economy Seminar.
• The Impact of Geopolitical Conflicts on Trade, Growth, and Innovation (with Eddy Bekkers).
  • (Trade, Growth, Structural Modeling) Geopolitical conflicts have increasingly been a driver of trade policy. We study the potential effects of global and persistent geopolitical conflicts on trade, technological innovation, and economic growth. In conventional trade models the welfare costs of such conflicts are modest. We build a multi-sector multi-region general equilibrium model with dynamic sector-specific knowledge diffusion and explore the potential impact of a “decoupling of the global economy.” We divide the global economy into two geopolitical blocs – East and West – based on foreign policy similarity and model decoupling through an increase in trade costs. Results yield three main insights. First, the projected welfare losses for the global economy of a decoupling scenario can be drastic, as large as 12% in some regions and are largest in the lower income regions as they would benefit less from technology spillovers from richer areas. Second, the described size and pattern of welfare effects are specific to the model with diffusion of ideas. Without diffusion of ideas the size and variation across regions of the welfare losses would be substantially smaller. Third, a multi-sector framework exacerbates diffusion inefficiencies induced by trade costs relative to a single-sector one.
  • Draft article; VoxEU Column.
  • Presented at European Central Bank’s Trade Seminar; 8th IMF-WB-WTO Trade Research Conference; 24th Annual Conference on Global Economic Analysis; and WashU at Saint Louis Economics Grad Student Conference.
• Dynamic Adjustment to Trade Shocks (with Junyuan Chen, Marc Muendler, and Fabian Trottner)
  • (Trade, Supply Chain, Cycle Adjustment, Structural Modeling) Global trade flows and supply chains adjust gradually. Empirical estimates of the trade elasticity for the short run are about half as large as those for the long run and suggest that trade is subject to substantive adjustment frictions. We develop a tractable framework that provides microfoundations for dynamic trade adjustment and rationalizes reduced-form estimation of a time-varying trade elasticity. The model features staggered sourcing decisions and nests the Eaton-Kortum model as the limiting long-run case. We calibrate the model to time-varying trade elasticities and use it to quantify the welfare impact of the 2018 US-China trade war. Staggered sourcing decisions considerably exacerbate losses from the trade war, with cumulative welfare losses 300% larger in the short run and 70% larger in the long run than in the Eaton-Kortum benchmark. Third countries such as Mexico can suffer welfare losses in the short run and welfare gains in the long run.
  • Draft article
  • Presented at NBER’s Trade and Macroeconomics Summer Institute; CESifo Area Conference on Global Economy 2024; FREIT’s Empirical Investigations in Trade and Investment (EITI), 15th Meeting; UCSD Faculty Seminar; and the European Central Bank’s Trade Seminar.
• Gender-Segmented Labor Markets and Trade Shocks (with Gladys Lopez-Acevedo and Raymond Robertson) Revision requested at World Development
  • (Trade, Labor Markets, Gender, Inequality) This paper focuses on how gender segmentation in labor markets shapes the local effects of international trade. We first develop a theoretical framework that embeds trade and gender-segmented labor markets to show that foreign demand shocks may either increase or decrease the female-to-male employment ratio. The key theoretical result shows formally that the effects of trade on gender-segmented labor markets depend crucially on (a) the sectors that face the foreign demand shock; and (b) the domestic relevance of the foreign countries in which the demand shocks originate from. If the foreign demand shock from a relevant market happens in a female-intensive (male-intensive) sector, the model predicts that the female-to-male employment ratio should increase (decrease). We then use plausibly exogenous variation in the exposure of Tunisian local labor markets to foreign demand shocks and show that the empirical results are consistent with the theoretical prediction. In Tunisia, a country with a high degree of gender segmentation in labor markets, foreign-demand shocks have been relatively larger in male-intensive sectors. This induced a decrease in the female-to-male employment ratio, with households likely substituting female for male labor supply.
  • Draft
  • Presented at UCSD Graduate Student Seminar Series and the World Bank’s Brownbag Lunch Seminar Series.
• Testing Piketty’s Hypothesis on the Drivers of Income Inequality: Evidence from Panel VARs with Heterogeneous Dynamics Revision requested at Public Choice
  • (Inequality, Empirical Macroeconomics) Thomas Piketty’s Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its theoretical causal chain. In this paper, I build a set of Panel SVAR models to check if inequality and capital share in the national income move up as the $r-g$ gap grows. Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of $r-g$
  • Draft.

Research in progress

• Tax Multipliers in the United States: a Regional Perspective (with Edoardo Briganti and Victor Sellemi).
  • (Fiscal Policy, Inequality, Spatial Data) Policy-induced tax changes have very different incidence profiles. For instance, the tax reforms pursued by President Bush (2002) and President Obama (2013) were very different: the former was a large tax cut for both low-income and high-income tax units, while the latter was a small tax cut for the low-income households and a large tax hike for high-income earners. Presumably, such events could have very different macroeconomic implications. Individuals at different points of the wealth and income distributions have different marginal propensities to consume, which could substantially impact fiscal multipliers. Standard macroeconometric only allows us to estimate average multipliers over time. In this project, we estimate the event-specific causal effect of different federal personal income tax reforms on local economic activity, exploiting event-county-level variation in tax incidence induced by all the major federal personal income tax reforms in the United States since 2000. We use adjusted gross income brackets at the county level to produce a novel data set of local taxable income distributions. We then combine the county fiscal income distributions and tax policy variation at the federal level to construct county tax shocks, using a shift-share approach to estimate local multipliers of local tax liability on different measures of local economic activity, in particular employment, consumption, and retail GDP.
  • Slides; Draft coming soon.

Refereed research articles

• Pairwise difference regressions are just weighted averages. Nature’s Scientific Reports 11, 23044 (2021).
  • (Econometrics, Covid-19) This paper is a commentary showing that one paper published in Nature’s Scientific Reports claiming no association between stay-at-home policies and Covid-19 deaths had made serious mathematical mistakes in their regression models, which rendered their conclusion invalid. This commentary led to the retraction of the original paper.
• Institutions and growth: A GMM/IV Panel VAR approach. Economics Letters. v. 138, p. 85-91 (2016).
  • (Growth, Institutions, Dynamic Panels Econometrics) In this paper, I build a panel structural vector autoregression (SVAR) model for a short panel of 119 countries over 10 years and find support for the institutions hypothesis. Controlling for individual fixed effects, I find that exogenous shocks to a proxy for institutional quality have a positive and statistically significant effect on GDP per capita. On average, a 1% shock in institutional quality leads to a peak 1.7% increase in GDP per capita after six years.
• Domestic market integration and the law of one price in Brazil (with Troy Matheson). Applied Economics Letters, 24:5, 284-288 (2016).
  • (Spatial Data, Trade, Dynamic Panels Econometrics) This article presents the first assessment of domestic market integration in Brazil using the law of one price. The law of one price is tested using two panel unit root methodologies and a unique data set comprising price indices for 51 products across 11 metro-areas.

Book chapters

• Trade Liberalization and Active Labor Market Policies (with A. Messa, C. Pio, E. Leoni, & L.G. Montes) In: Antonio Spilimbergo and Krishna Srinivasan. (Eds.). Brazil: Boom, Bust, and the Road to Recovery. Washington: IMF, 2018, pp. 111-124.
  • (Trade, Labor, Spatial Data, Structural Model) Documents key facts about trade openness in Brazil (or lack thereof); and then presents the result of a general equilibrium model that tries to anticipate the long run impact of trade liberalization in each commuting zone in Brazil. Most commuting zones would benefit see a mild expansion in formal employment after liberalization, but, consistent with recent empirical estimates, the model predicts that some regions would be disproportionately affected.
• Income Inequality in Brazil: a Closer Look at the Evolution in States (with I. Karpowicz) In: Antonio Spilimbergo and Krishna Srinivasan. (Eds.). Brazil: Boom, Bust, and the Road to Recovery. Washington: IMF, 2018, pp. 111-124.
  • (Inequality, Poverty, Spatial Data) Documents the evolution of income inequality across different states in Brazil. Leverages the data from a large panel of data surveys and uses a novel methodology that allows households’ incomes to be adjusted for price-level differences across states. One of the findings is that regional income inequality in Brazil happens primarily among the middle classes (median households) of each state – and differences in income across the very poor (bottom 5% of each state) and very rich (top 5% of each state) across states is not very large.
• Infrastructure in Latin America and the Caribbean (with V. Cerra, A. Cuevas, I. Karpowicz, T. Matheson, R. Papageorgiou, I. Samake, K. Vitola, & S. Vtyurina) In: Hamid Faruqee; S. Pelin Berkmen. (Eds.). Managing Transitions and Risks}. Washington: IMF, 2016, v. 16, p. 1-115.
  • (Growth, Infrastructure, Latin America) Comprehensive review of quantity and quality of infrastructure capital stock in Latin America and the Caribbean.

Policy papers and technical reports

• Abertura Comercial para o Desenvolvimento Econômico (lead-author, with many coauthors). Office of the President of Brazil, 2018.
  • (In Portuguese. Trade, Labor, Spatial Data, Structural Model) Documents key facts about trade openness in Brazil (or lack thereof); and then presents the result of a general equilibrium model that tries to anticipate the long run impact of trade liberalization in each commuting zone in Brazil. Most commuting zones would benefit see a mild expansion in formal employment after liberalization, but, consistent with recent empirical estimates, the model predicts that some regions would be disproportionately affected.
• Custos Econômicos da Criminalidade no Brasil (lead-author, with many coauthors). Office of the President of Brazil, 2018.
  • (In Portuguese. Development, Accounting, Crime) First accounting of total subnational and central expenditures related to violence in Brazil: justice administration; police; insurance; loss of productive capacity, among others. It incorporates both the private sector and public sector.