Research

Working Papers

Firm-Level Origins of Tariff Pass-Through: Importer Heterogeneity and Welfare Decomposition [Draft] [SSRN], with Chengyuan He, Chang Liu, and Soo Kyung Woo New draft coming soon!

Abstract: We develop a decomposition framework and use confidential U.S. Census data to show that pass-through to U.S. import prices during the U.S.–China trade dispute was incomplete at the firm level, but complete at the aggregate level. This gap reflects a reallocation of imports toward higher-priced firms and costlier new supplier relationships within product–country markets. We then derive a unified welfare decomposition formula, showing how firm heterogeneity shapes the welfare effects of tariffs and identifying the sufficient statistics and general-equilibrium mechanisms needed for welfare estimation. Finally, we quantify the welfare effects using an importer model and find that ignoring firm heterogeneity underestimates the welfare losses from tariffs. Our methods can be used to study other forms of pass-through and heterogeneous responses to common cost shocks.

Unpacking the Green Innovation Slowdown [Draft] [SSRN], with Yeju Chen

Abstract: Despite escalating climate concerns and intensifying policy support, aggregate green innovation has puzzlingly slowed since 2010 across various OECD countries. Using U.S. patent data, we document that green innovation is concentrated among firms with information and communication technology (ICT) capabilities and that these firms primarily drive the post-2010 stagnation. To rationalize these facts, we develop and estimate a general equilibrium model featuring endogenous technology-class selection, directed innovation, and firm dynamics. In the model, ICT firms possess a comparative advantage in green innovation through lower innovation costs. Our model highlights a fundamental policy trade-off: ICT-targeted green subsidies are more efficient than uniform subsidies when dirty innovation is relatively costly, while the reverse holds when dirty innovation is cheap, due to general-equilibrium crowd-out effects. Quantitatively, we find that the ICT innovation slowdown is the primary catalyst for the slowdown in green innovation, overshadowing the effects of falling fossil-energy prices and shifts in entrant composition. Policy counterfactuals reveal that an ICT-targeted subsidy yields a higher consumption-to-subsidy multiplier than a uniform subsidy, both before and during the green innovation slowdown.

Innovation Potential, Firm Life Cycle, and Cross-Country Productivity Differences [Draft] [SSRN]

Abstract: I provide new facts on firm type, innovation quality and innovation frequency across countries. In developed countries, firm type, innovation quality, and innovation frequency are mostly determined at birth. In developing countries, there are fewer innovative and radically innovative firms. Additionally, these firms have lower radical innovation frequency but higher incremental innovation frequency. The cross-country difference is mainly observed in high external financial dependence industries. To explain these facts, I build a semi-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.

Uneven Firm Growth in a Globalized World [Draft] [SSRN] , Revise and Resubmit at Journal of Monetary Economics

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 an open-economy endogenous growth model with strategic domestic competition to study how globalization has affected OECD productivity growth since the 1990s. I show that once strategic domestic competition is accounted for, the long-run growth gains from globalization are smaller than previous models predict, and under certain conditions they turn negative. The estimated model predicts that two forces of globalization—falling trade costs and rising international knowledge spillovers—boost innovation by OECD leaders more than domestic followers via a market size effect, increasing short-run growth. However, the induced weaker domestic competition depresses long-run gains, as followers become discouraged and leaders face diminishing returns from escaping competition. The model also implies that globalization correlates with broad macroeconomic trends in OECD countries and emerging markets, including a declining global output share of the OECD, rising industrial concentration, and higher R&D-to-GDP ratios.

Financial Development, Firm Growth, and Aggregate Productivity Divergence [Draft] [SSRN] , Revise and Resubmit at Journal of International Economics

Abstract: Recent advancements in digitisation and the green transition have amplified the role of ICT (information and communications technology) in productivity growth. To optimise ICT's potential for future growth, it is essential to identify and address barriers to its progress. My study examines the historical disparity in aggregate productivity growth across countries since the ICT revolution. I find that firms in less developed financial markets, particularly small ones in industries with high ICT intensity and high external financial dependence, have experienced relatively slower growth in productivity and patents. To rationalize these findings, I build a model featuring endogenous firm productivity growth through innovation investment, capital investment, and financial frictions. Financial frictions reduce aggregate productivity growth through two channels: innovation investment and misallocation, with the former being the dominant factor. The model also provides conditions under which rapid capital and output growth can coexist with slow productivity growth due to firms' non-linear trade-offs in allocating constrained investment between capital and productivity.

Selected Works in Progress

Conglomerate Market Power, with Min Fang and Yulin Wang
Semiconductor Export Controls and Innovation in the U.S.-China Technology War, with Haishi "Harry" Li and Sifan Xue

Discussions

Discussion of "Asset Bubbles, R&D, and Endogenous Growth" by Ding Dong, Jianjun Miao, and Pengfei Wang (2026) [slides]
Discussion of "Trade Wars with FDI Diversion" by Sifan Xue (2024) [slides]
Discussion of "Slack and Economic Development" by Michael Walker, Nachiket Shah, Edward Miguel, Dennis Egger, Felix Samy Soliman, and Tilman Graff (2024, NBER Working Paper No. 33055) [slides]
Discussion of "Foreign Technology Adoption as a Flying Propeller" by Yunfang Hu, Takuma Kunieda, Kazuo Nishimura, and Ping Wang (2023, NBER Working Paper No. 31159) [slides]
Discussion of "The Plant-Level View of an Industrial Policy: The Korean Heavy Industry Drive of 1973" by Minho Kim, Munseob Lee, and Yongseok Shin (2021, NBER Working Paper No. 29252) [slides]

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