Refereed Publications

Other Publications and Writings

Working Papers

Abstract:  Using a novel database of domestic financial reforms in 90 countries over 1973-2014, we document that global financial liberalization followed an S-curve path: reforms were slow and gradual in early periods, accelerated during the 1990s, and slowed down after 2000. We estimate a learning model that explains these dynamics. Policymakers updated their beliefs about the growth effects of financial reforms by learning from their own and other countries' experiences. Positive growth surprises in advanced economies helped accelerate belief updating worldwide, leading to the global wave of financial liberalization in the 1990s. The 2008 financial crisis, however, caused significant belief reversals.

Abstract:  This paper estimates, for the first time, the exchange rate elasticity of bilateral trade in services; in so doing, it provides indirect evidence of the prevalence of  dominant currency pricing in services trade. We draw on a new data set of bilateral trade flows in services that covers eleven service sectors in more than 200 countries for the period 1995--2017. We distinguish between  exchange rate pass-through and the volume elasticity by zeroing in on tourism, a sector for which proxies for trade volume (viz., tourist arrivals and hotel nights spent) are available. Our analysis offers strong evidence of both producer currency pricing and dominant currency pricing in services trade, although the results vary across different service categories. We find that bilateral exchange rates have a greater effect on the value of services trade than do US dollar exchange rates. Since traded services are frequently used as inputs in the production of re-exported goods and services, our analysis also shows that downstream dollar exchange rate movements (i.e., through forward linkages) affect the demand for service imports. However, downstream bilateral exchange rates do not have significant effects.

Abstract: This paper studies how the composition of knowledge, in addition to the amount of knowledge capital, a country possesses matters for development. We develop a multi-sector model of innovation, trade and growth, in which sectors differ in terms of their knowledge applicability in innovation in other sectors. The model describes how countries allocate R&D in different sectors and how the endogenous cross-country variations in knowledge composition matters for income difference. It yields new insights that trade costs—besides reducing trade volume— impede aggregate innovation efficiency through the within-country allocation of R&D towards sectors with lower knowledge applicability, demonstrating a “composition effect”. We construct measures quantifying the sector-specific knowledge applicability using cross-sector patent citations. Based on this index, we present cross-country evidence that supports the model’s main implications: (a) countries that are more geographically remote tend to export disproportionately less in highly applicable sectors; (b) the “applicability bias” of a country’s knowledge structure is positively associated with its income level.

Work in Progress


Comments and Discussions

  • Discussion of "Offshoring and Inflation" by Diego Comin and Robert Johnson, International Trade Dynamics Workshop, 2020
  • Discussion of "Firm Entry and Regional growth Disparities: the Effect of SOEs in China" by Loren Brandt, Gueorgui Kambourov and Kjetil Storelsetten, 1st IMF-Atlanta Fed Joint Workshop on China's Economy, May 2016.
  • Discussion of "Capital Obsolescence and Agricultural Productivity" by Julieta Caunedo and Elisa Keller, 2nd Workshop on Macroeconomic Policy and Income Inequality, IMF, Oct 2015
  • Discussion of "Technology Shocks: Novel Implications for International Business Cycles"  by Andrea Raffo, NBER Summer Institute IFM, July 2009