Working Papers
This paper estimates the causal effect of public financing support on exports using alarge and plausibly exogenous shock to the supply of export financing support due to the shutdown of the U.S. Export-Import (ExIm) Bank in 2015. I utilize this unique quasi-experiment together with the synthetic control method to estimate that the average affected industry experienced a reduction in exports by 2.2%, or 56 cents per dollar of lost support. While these results suggest that support by the ExIm bank can be an effective policy tool to relax financing constraints and promote exports, the observed allocation of financing support across industries may be suboptimal as more efficient targeting could create an additional 66,000 export-related jobs per year.
The Effect of Credit Constraints on Trade in a Quantitative General Equilibrium Model
I introduce financial frictions, modeled as a collateral constraint for exporters, into a heterogeneous firm model of international trade. My analysis shows that collateral constraints reduce trade and welfare, while financial development increases exports. Financial frictions are also able to explain the imperfect correlation between productivity and exporting status usually observed in the data. Using country-level proxies for financial constraints and financial development, reduced form empirical evidence confirms key predictions of the structural model.
Note: Welfare, measured as real wage (w/P), increases with higher financial development (A) and lower financial frictions (δ).
The Political Economy of Export Promotion: Evidence from Export-Import Bank Reauthorization Votes
Note: ExIm share is the annual value of all ExIm authorizations divided by manufacturing exports, averaged over 2007-2015
We analyze the determinants of political support for export promotion policies, in particular the reauthorization of the US Export-Import Bank. Using a newly created dataset that combines congressional voting data with geocoded data on firms supported by the Export-Import Bank, we document the declining bipartisan support for this type of export promotion, which ultimately led to the bank’s shutdown in 2015. Support for the Export-Import Bank was higher in congressional districts with more manufacturing establishments and a lower number of workers per establishment, lending support to the hypothesis that business groups generally support trade promotion while labor groups oppose it. For some years, we also find a correlation between the number of firms supported by the Export-Import Bank and the probability that a representative supports the bank, but no impact of the dollar amount of support. To the contrary, we find no evidence that congressmembers on the financial services committee used their influence to funnel support into their own congressional districts.
Work in Progress
The Impact of Financing Constraints on Trade: Evidence from US Firm-Level Data
This is an ongoing project which I work on as "Special Sworn Status Researcher" using data from the U.S. Census Bureau. The project is hosted at the Rocky Mountain Research Data Center (RDC). I match firm-level balance sheet data, that can be used to calculate financing constraints, with transaction-level customs data on foreign sales, in order to analyze the dynamic relationship between financial constraints and exports. One question I would like to answer is whether financial constraints determine exporting status, or whether exporting increases firm level financial health and thus decreases financial constraints. I am particularly interested in firm-level heterogeneity with respect to firm size, as theory suggests that larger firms should be less financially constrained, but are also more likely to exporters.
Other
We devise a simple momentum-based stock trading strategy that maximizes a mean-variance objective function by dividing the portfolio into a "winner-basket" that increases expected return and a "diversification-basket" that reduces risk. For investors with low risk aversion, the strategy overweights the "winner-basket", while for risk averse investors, the strategy converges to an equal weight strategy. We use a market simulator in Matlab to show that our strategy consistently beats the benchmark equal weight strategy as well as more advanced strategies based on deep neural networks, especially when the time horizon is short relative to the number of available stocks.
The share devoted to foreign aid in developed countries’ government budgets is usually small. But on the side of the recipient country, aid inflows can be rather large, as a share of government revenues and also relative to GDP. Foreign aid thus provides the opportunity for donors to obtain a large positive impact on living conditions in developing countries with relatively little financial effort. This study extends the aid-growth literature by analyzing the effect of foreign aid, disaggregated into bilateral grants and loans, on growth. The endogeneity of aid is taken into account and several distinct instrumentation strategies are employed in order to obtain meaningful and consistent estimates, while additional attention has been paid to the identification problems stemming from weak instrumentation and multicollinearity in the presence of multiple endogenous regressors. I find positive correlations between growth both grant aid and loan aid, but once the endogeneity bias was accounted for, loans became insignificant. Grants however were consistently, albeit weakly, associated with growth in the majority of specifications. The estimated marginal effect was in most cases larger than previous estimates, found in the literature for aggregated aid.