Working Papers

"Globalization and Structural Transformation: The Role of Tradable Services" (JMP) [Draft]

Abstract: This paper studies how globalization (changes in trade costs for goods and services) impacts structural transformation (reallocation of GDP from goods to services). I construct a model where globalization affects structural transformation through changes in income, relative prices between goods and services, or comparative advantage. Counterfactual exercises reveal globalization's heterogeneous effects on 66 countries' structural transformation from 1995 to 2018 due to its differential impact on their comparative advantages. When a country's export trade costs relative to import trade costs change at different rates for goods and services, its comparative advantage shifts, and its structural transformation is significantly impacted.

“FDI and Aggregate Productivity Growth in Chinese Manufacturing Firms” [Draft available upon request]

Abstract: This paper develops a firm-dynamics model with heterogeneous productivities and foreign direct investment (FDI). In the model, a firm can improve its productivity through foreign technology adoption, innovation, and spillovers (imitation). Unlike domestic firms, FDI firms possess foreign technology adoption capabilities. Moreover, they participate in innovation at different rates from domestic firms. These features of the model generate different productivity distributions for domestic and FDI firms. The model is disciplined using the micro-evidence from Chinese firms and their patents from 1998 to 2007. By calibrating the productivity distributions to the dataset, this study shows that the annual growth rate of aggregate productivity would decrease from 8.42% to 7.50% without the presence of FDI firms. Counterfactual exercises demonstrate that the growth contribution mainly accrues through foreign technology adoption, which explains 0.72 p.p. of the total gain of 0.92 p.p.

Work in Progress

“College Tuition and Regional Convergence” with Bipul Verma