Research

Working Papers

     Best Paper Award for Ph.D. Students, Australasia Meeting of the Econometric Society, 2022     Runner-up for Best Student Paper, China Economist Society Annual Conference, 2022     Finalist for Best Paper Awards, International Network for Economic Research Annual Conference, 2022
Abstract: I develop a two-country endogenous growth model with strategic innovation in domestic and international markets to study how globalization affects uneven firm growth and its implications for industrial concentration and productivity growth in OECD countries. Globalization, characterized by decreasing trade iceberg costs and increasing international knowledge spillovers, creates heterogeneous firm responses based on technological distance from competitors. I estimate the model using patent data, which shows that firms innovate less when lagging behind domestic or global competitors. The model predicts that globalization boosts innovation by domestic leaders more than followers via a market size effect, increasing short-run growth and domestic concentration. However, the induced weaker domestic competition eventually depresses long-run growth: followers and leaders reduce innovation because of discouragement and a diminishing escape-competition motive, respectively. 

Abstract: Recent advancements in digitisation and green transition have amplified ICT's (information and communications technology) role in productivity growth. To optimise ICT's potential for future growth, it is crucial to identify and address factors hindering its progress. My study examines the historical disparity in productivity growth between Southern and developed European countries since the ICT revolution. I document Southern European firms, particularly small ones in high ICT intensity and high external financial dependence industries, have experienced lower productivity growth, intangible capital growth, and patent creation compared to their counterparts in more developed European countries. To rationalize these findings, I build a model featuring endogenous firm productivity growth through innovation investment and size-dependent financial frictions. Financial frictions reduce aggregate productivity growth through two channels: innovation investment and misallocation. Quantitatively, the former is the dominant factor. The model also highlights that fast capital and output growth may coexist with slow productivity growth due to firms' tradeoffs in allocating a constrained amount of investment between capital and productivity. Abstract: Recent studies examining product-country-level trade data have concluded that the increase in U.S. import tariffs during the U.S.-China trade dispute was fully borne by U.S. importers. However, our examination of firm-product-country level data from the U.S. Census reveals that this tariff pass-through is incomplete. The extensive margins on sourcing products and countries play a significant role in reconciling with the existing findings. Importers sourcing from China are more inclined to discontinue importing existing products from current trading partners and less inclined to begin importing new products from alternative sourcing countries. Conversely, importers with more established sourcing options or higher import shares are more likely to initiate imports of new products from different sourcing countries, despite facing higher unit prices. This behavior ultimately contributes to the complete pass-through observed at the aggregate level.

Abstract:  I provide a new set of facts on innovation and firm growth in both developed and developing countries, considering heterogeneous firm types and innovation types. In developed countries, firm type, innovation frequency, and innovation quality are mostly determined at birth. In developing countries, there are fewer (radically) innovative firms, and firms have lower radical innovation frequency but higher incremental innovation frequency. The cross-country difference is largely explained by the less developed financial markets in developing countries. To explain these facts, I build an endogenous growth model with financial frictions and firm heterogeneity and demonstrate that collateral constraints combined with limited liability conditions impede innovative firm creation and distort firms' choice between radical and incremental innovation in developing countries. I offer new policy implications for countries at different development stages.  

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