Job Market Paper:
- "Currency Invoicing, Trade Credit and Sudden Stops" (LINK).
- Abstract: When normal bank loans are scarce, supplier credit, or trade credit, can provide ﬁrms with much needed ﬁnancing. We investigate the role of trade credit during a sudden stop (i.e. periods with rapid outﬂows of capital) and identify a new stylized fact. Trade credit ﬂows out during a sudden stop, but only for those countries that invoice heavily in a foreign currency. We develop a theoretical model to provide intuition for the empirical results, and globally solve it. The model’s framework follows in the style of a small open economy with a borrowing constraint, but we have the key innovation of a second occasionally binding constraint on the ﬁrm as they borrow and lend supplier credit. Importantly, our model reproduces the stylized fact. It also predicts that sudden stops happen much more often when trade is invoiced in a foreign currency. This also is consistent with the data, where we estimate that going from zero to all trade in domestic currency reduces the likelihood of being in a sudden stop.
- "Risk Hedging in Managed Markets: An Application to Alaskan Salmon Fisheries" (LINK) with Mathew Reimer.
- Abstract: Asset pricing models are often used to quantify how investors hedge risk in openly traded markets. In carefully managed asset markets, as in the market for Alaskan fisheries, there is scarce evidence showing that risk hedging is important for the dynamics of permit prices and portfolio holdings. Permit prices reflect the expected future value of profits, however, just like a financial asset, they also serve as a tool to hedge a fisherman`s income risk. In this paper we derive a simple regression equation that finds support for this dual purpose of investing in fishing permits. Our key regression equation is derived from a simple theoretical model with heterogeneous agents who buy permits from distinct fisheries, each fishery with its own source of idiosyncratic risk.
- "Currency Invoicing and Risk" (LINK)
- Abstract: Firms take on risk when they trade internationally. Payments (and shipments) for goods are often lagged up about 90 days, and between ﬁrms there is always the chance that one ﬁrm breaks contract. We developed a payment choice model within a two-country dynamic general equilibrium framework to draw out the consequences of these two frictions. Our model shows that, when home interest rates are high, exports will be invoiced in the low interest rate foreign currency. This will lead to greater real volatility in consumption and, therefore, higher precautionary savings by home consumers. Our preliminary ﬁndings are broadly consistent with the data.
- "Social Spending, Taxes and Income Redistribution in Paraguay" (LINK) Commitment to Equity Working Paper 13 (2013). with Higgins, Sean et al.
- Abstract: How much redistribution does Paraguay accomplish through social spending and taxes? How progressive are revenue collection and social spending? Using a standard fiscal incidence analysis, we quantify the reduction in inequality and poverty in Paraguay across income concepts, and contextualize these results by placing Paraguay in comparative perspective with other Latin American countries. Paraguay achieves a relatively small reduction in inequality, even when in-kind education and health benefits are taken into account. Direct taxes are progressive, indirect taxes are regressive, and total taxes are regressive. Social spending is progressive in relative terms, but less so than in any of the other countries analyzed.
- "A Survey of Empirical Models of Labor Transitions Following Trade Liberalization" (LINK). (2015) with David Riker.
- Abstract: In this article, we survey recent empirical studies that explain why labor markets adjust slowly after a country reduces its barriers to trade. The models that we cover are technically complex: they simulate the economy-wide transitions that result from the employment decisions of individual workers who face costs of moving between sectors, loss of the usefulness of their sector-specific experience, and many types of uncertainty. The adjustment costs in the models vary across types of workers, and the speed of adjustment varies across the countries studied and the modeling assumptions adopted. We present these technical models in a relatively non-technical way. We summarize the similarities and differences in the assumptions and findings of the different studies.
- "Trade Policy and the Returns to Investment" (LINK). Undergraduate Economic Review 5.1 (2009): 2.
- Abstract: This paper considers the effect of a firm’s sales location on the relationship between tariffs, exchange rates, and the flows of Foreign Direct Investment (FDI). Much of the FDI literature assumes that an increase in the average tariff or relative exchange rate will provoke a decrease in foreign investment. This result, however, is contingent on the firm’s preference for exporting. When the majority of sales for a foreign firm are located within its own the domestic market, the impact from changes in the tariff and exchange rate are reversed. This paper further argues that the firm's pre-existing sales orientation(domestic/foreign) will be a factor that initially determines the influence of tariff and exchange rates on FDI flows. Applying the logic of the Stolper Samuelson theorem, we develop a theoretical framework to predict a variety of consequences for wages and rental rates in US industrial sectors. Using a series of panel data regressions and a three-equation model, we generate a policy analysis that incorporates and partially validates our theory. Our final conclusions also call upon the elasticities of substitution in major industrial sectors as they correspond to changes in trade policy.
- 3) “Boletín de Comercio Internacional: Concentración de Exportaciones y una Simulación Estadística del Acuerdo con la Unión Europea.” Observatorio Economía Internacional de Paraguay. Boletín 2.